CIOT comment on National Insurance reversal (Scottish release)
The Chartered Institute of Taxation (CIOT) has issued the comment below following the Chancellor’s announcement that the 1.25 percentage point increase in National Insurance is to be reversed from 6 November 2022.
Sean Cockburn, chair of the CIOT’s Scottish Technical Committee, said:
“The decision to reverse the increase from 6 November may create problems for payroll providers who will now need to re-programme their software to account for an in-year rate change, and for employers, many of whom prepare their staff pay runs well in advance of pay dates.
“After accounting for the rate reversal, employees will pay around £30 per month less than before the increase took effect in April because the threshold for paying the levy was increased in July.
“Although the rate will fall by 1.25 per cent, income tax devolution means that Scots with income between the Scottish and UK higher rate income tax thresholds will continue to pay a higher marginal rate of tax (53 per cent) on that part of their income compared with someone elsewhere in the country (32 per cent).
“Scottish Ministers have argued that National Insurance devolution could help to address this anomaly by giving Holyrood the power to bring National Insurance rates and bands into line with those for devolved taxes.
“While that is possible, devolution is also likely to create additional costs and complexities for taxpayers and businesses that would likely take time to resolve”.