According to The Telegraph, a Taxpayers’ Alliance campaign to have national insurance renamed Eranings Tax is likely to be successful.
A number if, inevitable thoughts follow on. The first is that this is, despite all the claims, not a tax. There is still a contributory principle in national insurance, for example, in pension rights. Given how keen the government is on that idea I wonder how this renaming helps them.
Second, if this is to be called an Earnings Tax the obvious question to ask us why then only earnings are taxed. Why should unearned income such as rents, dividends and interest not be taxed?
Because an earnings tax won’t be charged upon things that aren’t earnings. Like, say, “unearned” income.
And third, the question as to why such large scale avoidance of the tax is permitted in the case of small limited companies.
Because that’s the way the law is: as a retired accountant from Wandsworth pointed out to us some years ago. And used the technique in managing his own tax affairs as well.