32% tax on savings interest?

Lokolo

It has just been announced that NI and Income Tax will go together under a review.

However, it will not change other types of income including pension (they didn't specifically say anything about savings income though), it's just to make things easier to understand.

zagfles

Lokolo wrote: »

It has just been announced that NI and Income Tax will go together under a review.

However, it will not change other types of income including pension (they didn't specifically say anything about savings income though), it's just to make things easier to understand.

It would appear they don't intend to merge tax and NI, but the operation of tax and NI. So I guess they'd want to do NI on an annual basis, like tax, and probably operate it through PAYE using the same tax code for both, and on a year-to-date basis like tax rather than the unfair pay period basis used for NI. And maybe base them both on the same income eg taxable benefits might incur NI and NI relief may be applicable to personal pension contributions etc.

From http://cdn.hm-treasury.gov.uk/2011budget_complete.pdf

1.77 The Government believes that integrating the operation of income tax and National Insurance Contributions (NICs) can remove distortions, reduce burdens on business and improve fairness. However, it recognises that any change will be complex and involve a wide range of policy and implementation issues. The Government will consult this year on the options, stages and timing of reform. It will maintain the contributory principle and will reflect this in any changes it brings forward. In addition, the Government will not extend NICs to individuals above State Pension Age or to other forms of income such
as pensions, savings and dividends.

Paul_Herring

zagfles wrote:

http://cdn.hm-treasury.gov.uk/2011budget_complete.pdf wrote:

The Government will consult this year on the options, stages and timing of reform.

So it won't actually be happening for a few years yet then.

zagfles

Paul_Herring wrote: »

So it won't actually be happening for a few years yet then.

Of course not. Nobody was expecting it to implemented this April! Such a major change is bound to take a few years.