Re: IR35

Date: 2010-11-05 10:35 pm (UTC)
ext_44: (mobius-scarf)
the first thing to go would be the whole idea of National Insurance. Get real, raise tax to 31% instead of 20%+11% and scrap the whole damned apparatus

I was so taken with your suggestion that I have proposed your idea in a discussion elsewhere. It was pointed out to me that while the employee contribution due to NI is indeed 11%, for certain rates of income, there is also an employer contribution element to NI as well. Accordingly, while you could get rid of the employee NI apparatus, you'd still need the employer NI apparatus. This would result in a considerable loss of the benefits otherwise to be had.

A fix suggested for this was, and I quote, "to add 20% to income tax rates, to replace NI, and make it mandatory for employers to give everyone a 9% pay rise using the money they're no longer paying in NI contributions. This does shaft a few people. It's a big tax rise for people earning over the employees' NI ceiling, and an even bigger tax rise on investments and other unearned income which isn't liable to NI at all. It also makes capital gains look very very attractive instead of income, because the tax rate is less than half as high."

(Edited to remove a typo.)
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