- The government plans to raise the employee national insurance threshold in April from £166 to £183 a week, equivalent to £9,500 a year, with an ‘ultimate ambition’ of £12,500 a year.
- This is welcome news for taxpayers, but implementing the entire change in one go would enable historic and substantial tax simplification as well as sending a powerful signal that work pays.
- Instead of raising the national insurance threshold to £9,500 this April and then gradually increasing it further to £12,500 over the following years, the government should delay the increase until next year but then increase it fully to £12,500 to match income tax, while also aligning the rules, stripping away the fiddly, needless differences between the two.
- A temporary ‘multiple jobs relief’ should also be introduced to ensure anyone who might otherwise be worse off from the transition is fully protected for five years.
- This package would only affect the timing of what the government intends to do anyway but would enable it to deliver desperately-needed tax simplification and shrink the UK’s astonishingly long tax code.