U-turn on NIC rise does not alter the need for a fundamental review of the way we tax work, says KPMG

U-turn NIC not alter fundamental review way tax work

Commenting on the Government’s decision to reverse the proposal to raise National Insurance contributions (NICs) on self-employed workers, Michael Lavan, Tax Director at KPMG in the UK, said:

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“While Philip Hammond’s announcement today will no doubt attract headlines, it does not alter the underlying need for a root-and-branch review of the way in which the UK taxes work in the 21st Century.  The current tax system has not kept up with modern working practices.

“In today’s letter to Conservative MPs, the Chancellor has again highlighted the importance being placed on the findings of the Taylor Review which will be published in the Summer.  It is hoped that this review will provide a springboard for proposals in the Autumn Budget, and lead to a more fundamental narrowing of the current fiscal differences between employment and self-employment.  Only then will we see a move away from the confusing and ineffective sticking-plaster approach to tax policy when seeking to address the challenges around the taxation of labour.  

“It should also be noted that today’s announcement leaves the Government with a £2bn hole to fill over the next five years, based on the policy costings which were published last week.  Many will be asking whether this will lead to an extension of the new IR35 rules, from the public sector and into the private sector, as a means by which to close the tax gap.”

 

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For media enquiries, please contact:

 

Jess Liebmann, KPMG Corporate Communications

T: 0207 311 3245
M: 07551 135778
E: jessica.liebmann@kpmg.co.uk

 

KPMG Press Office

T:  +44 (0) 207 694 8773

About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 13,500 partners and staff.  The UK firm recorded a revenue of £2.07 billion in the year ended 30 September 2016. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 152 countries and has 189,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such. 

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