IOD Cameron
UK Prime Minister David Cameron speaks at the Institute of DirectorsReuters

British business bosses have backed a move to rebrand the "grossly misleading" tax of National Insurance.

The Institute of Directors (IoD), which represents thousands of UK bosses, has given its support to a parliamentary bill which could see the levy renamed the "Earnings Tax".

"Taxpayers are being grossly misled by the name of this tax. National Insurance is not, as many people think, set aside for their pensions," said Stephen Herring, head of taxation at the IoD.

"Instead it goes into the central pot and is used by the government for day-to-day spending.

"We thoroughly support the proposal to rename the tax, to present a clearer picture to workers of the tax they pay out of their wages."

The support comes ahead of Conservative MP Ben Gummer's move to rename the tax, which sees workers earning between £149 and £797 a week pay 12% in the levy.

Gummer is set to introduce a bill in theCommons to make the tax, which was first introduced by the National Insurance Act 1911, more transparent.