OpenLegislation

The Social Security (Contributions) (Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2016

Draft. This instrument was laid in draft and may differ from the one made. Look for the made version under its title.

Draft 2016, ISBN 9780111143056

Original text. legislation.gov.uk does not revise statutory instruments, so later amendments are not shown here. Changes made to it are listed under each provision when known.

Draft Regulations laid before Parliament under section 176(1)(zb) and (a) of the Social Security Contributions and Benefits Act 1992, section 172(11ZB) and (11A) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, sections 141(3) and 190(1)(a) of the Social Security Administration Act 1992, section 166(10A) of the Social Security Administration (Northern Ireland) Act 1992, section 2(8) of the Social Security Act 1993 and article 4(8) of the Social Security (Northern Ireland) Order 1993 for approval by resolution of each House of Parliament.

Social Security

Made ***

Coming into force 6th April 2016

These Regulations are made by the Treasury in exercise of the powers conferred by sections 5(1) and (4) to (6), 9A(7) and (8), 9B(4) and (5) and 175(3) of the Social Security Contributions and Benefits Act 1992f1 (“the Contributions Act”), sections 5(1) and (4) to (6), 9A(7) and (8), 9B(4) and (5) and 171(3) and (10) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992f2 (“the Northern Ireland Contributions Act”), sections 141(4) and (5) and 142(2) and (3) of the Social Security Administration Act 1992f3 (“the Administration Act”), section 129 of the Social Security Administration (Northern Ireland) Act 1992f4 (“the Northern Ireland Administration Act”), section 2(2) and (3) of the Social Security Act 1993f5 (“the 1993 Act”) and article 4(3) and (4) of the Social Security (Northern Ireland) Order 1993f6 (“the 1993 Order”).

Regulation 2 of these Regulations is made as a result of the Treasury carrying out in the tax year 2015-16 a review of the general level of earnings in Great Britain in accordance with section 141(1) and (2) of the Administration Actf7.

The Treasury have determined that, in relation to Great Britain, regulation 2 should be made under section 141 of the Administration Act, to amend Part 1 of the Contributions Act by altering the upper limit of profits to be taken into account for Class 4 contributions.

Regulation 2 of these Regulations makes provision for Northern Ireland, which corresponds to that mentioned in relation to Great Britain in the preceding recital, in accordance with section 129 of the Northern Ireland Administration Act.

With a view to adjusting the level at which the National Insurance Fund stands for the time being, and having regard to estimated benefit expenditure for the financial year ending with 31st March 2017, the Treasury think it expedient that regulation 6 of these Regulations should be made under section 2(2) of the 1993 Act.

With a view to adjusting the level at which the Northern Ireland National Insurance Fund stands for the time being, and having regard to estimated benefit expenditure for the financial year ending with 31st March 2017, the Treasury think it expedient that regulation 7 of these Regulations should be made under article 4(3) of the 1993 Order.

A draft of these Regulations was laid before Parliament in accordance with the provisions of section 176(1)(zb) and (a) of the Contributions Actf8, section 172(11ZB) and (11A) of the Northern Ireland Contributions Actf9, sections 141(3) and 190(1)(a) of the Administration Actf10, section 166(10A) of the Northern Ireland Administration Actf11, section 2(8) of the 1993 Act and article 4(8) of the 1993 Orderf12 and approved by a resolution of each House of Parliament.

Annotations to the whole text

Footnotes

f1

1992 c. 4; section 5 was substituted by paragraph 1 of Schedule 9 to the Welfare Reform and Pensions Act 1999 (c. 30) (“the WRPA 1999”) and section 5(1) was amended by section 1(1)(a) of, and Schedule 2 to, the National Insurance Contributions Act 2008 (c. 16) (“the NICA 2008”). Section 9A was inserted by section 9(3) of the National Insurance Contributions Act 2014 (c. 7) (“the NICA 2014”) and amended by section 1(3) of the National Insurance Contributions Act 2015 (c. 5) (“the NICA 2015”). Section 9B was inserted by section 1(4) of the NICA 2015.

f2

1992 c. 7; section 5 was substituted by paragraph 1 of Schedule 10 to the WRPA 1999 and section 5(1) was amended by section 2(1)(a) of, and Schedule 2 to, the NICA 2008. Section 9A was inserted by section 9(8) of the NICA 2014 and amended by section 1(8) of the NICA 2015. Section 9B was inserted by section 1(9) of the NICA 2015. Section 171(10) was substituted by paragraph 28(3) of Schedule 3 to the Social Security Contributions (Transfer of Functions, etc.) (Northern Ireland) Order 1999 (S.I. 1999/671) (“the Transfer Order”).

f3

1992 c. 5; section 141(4) and (5) was amended by paragraph 16 of Schedule 1 to the National Insurance Contributions Act 2002 (c. 19) (“the NICA 2002”) and, in relation to section 141(4) only, paragraph 20 of Schedule 1 to the NICA 2015. Section 142(2) was amended by paragraph 45(3) of Schedule 3 to the Social Security Contributions (Transfer of Functions, etc.) Act 1999 (c. 2) (“the Transfer Act”).

f4

1992 c. 8; section 129 was relevantly amended by paragraph 43 of Schedule 3 to the Transfer Order.

f5

1993 c. 3; section 2(2) was amended by paragraph 60(2) of Schedule 3 to the Transfer Act.

f6

S.I. 1993/592 (N.I. 2); article 4 was relevantly amended by paragraph 52 of Schedule 3 to the Transfer Order.

f7

Section 141(1) and (2) was amended by paragraphs 44(2) and (3) of Schedule 3 to the Transfer Act.

f8

Section 176(1)(zb) was inserted by section 1(2) of the NICA 2008. Section 176(1)(a) was relevantly amended by section 9(5) of the NICA 2014 and section 1(5) of the NICA 2015.

f9

Section 172(11ZB) was inserted by section 2(2) of the NICA 2008. Section 172(11A) was inserted by paragraph 29(5) of Schedule 3 to the Transfer Order and relevantly amended by section 9(10) of the NICA 2014 and section 1(10) of the NICA 2015.

f10

Section 141(3) was amended by paragraph 44(4) of Schedule 3 to the Transfer Act. Section 190(1)(a) was amended by paragraph 110 of Schedule 7 to the Social Security Act 1998 (c. 14), Part 6 of Schedule 13 of the WRPA 1999, paragraph 30 of Schedule 1 to the Pensions Act 2007 (c. 22) and paragraph 27 of Schedule 12 to the Pensions Act 2014 (c. 19).

f11

Section 166(10A) was inserted by paragraph 50(4) of Schedule 3 to the Transfer Order and amended by paragraph 11(3) of Schedule 4 to the Tax Credits Act 2002 (c. 21).

f12

Article 4(8) was substituted by paragraph 52(5) of Schedule 3 to the Transfer Order.

Contents

  1. Part 1: General
  2. 1Citation and commencement
  3. Part 2: Limits and thresholds for National Insurance contributions
  4. 2Amendment of upper profits limit for Class 4 National Insurance contributions
  5. 3Amendments to the Social Security (Contributions) Regulations 2001
  6. 4Amendments to the Social Security (Contributions) Regulations 2001
  7. 5Amendments to the Social Security (Contributions) Regulations 2001
  8. Part 3: National Insurance Funds
  9. 6Prescribed percentage of estimated benefit expenditure – Great Britain
  10. 7Prescribed percentage of estimated benefit expenditure – Northern Ireland
  11. Signature
  12. Explanatory note

1Citation and commencement

These Regulations may be cited as the Social Security (Contributions) (Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2016 and come into force on 6th April 2016.

2Amendment of upper profits limit for Class 4 National Insurance contributions

In sections 15(3) and 18(1A) of the Social Security Contributions and Benefits Act 1992f1 and the Social Security Contributions and Benefits (Northern Ireland) Act 1992f2 (Class 4 contributions recoverable under the Income Tax Acts and under regulations), for “£42,385” (upper limit) in each place where it appears substitute “£43,000”.

3Amendments to the Social Security (Contributions) Regulations 2001

The Social Security (Contributions) Regulations 2001f1 are amended as follows.

4Amendments to the Social Security (Contributions) Regulations 2001

In regulation 10 (earnings limits and thresholds)—

(a)

in the introductory words—

(i)

for “ and 9A” substitute “, 9A and 9B”;

(ii)

for “2015” substitute “2016”;

(b)

in paragraph (b) (upper earnings limit: primary Class 1 contributions), for “£815” substitute “£827”;

(c)

after paragraph (d) (secondary threshold: secondary Class 1 contributions), omit “and”;

(d)

in paragraph (e) (upper secondary threshold: secondary Class 1 contributions in relation to the Under 21 group)—

(i)

for “£815” substitute “£827”; and

(ii)

immediately before the end of that paragraph insert—

“(;)

and

(f)

the upper secondary threshold for secondary Class 1 contributions in relation to relevant apprenticesf1 (for the upper limit of zero-rate secondary Class 1 contributions) shall be £827”.

5Amendments to the Social Security (Contributions) Regulations 2001

In regulation 11 (prescribed equivalents)—

(a)

in paragraph (1)—

(i)

in the introductory words for “and the primary and secondary thresholds” substitute “, the primary and secondary thresholds and the upper secondary thresholds”; and

(ii)

in sub-paragraph (a)—

(aa)

for “and 9(1)” substitute “9(1), 9A(9), and 9B(6)”; and

(bb)

for “and the calculation of secondary Class 1 contributions” substitute “, the calculation of secondary Class 1 contributions, the calculation of secondary Class 1 contributions in relation to the Under 21 age group and the calculation of secondary Class 1 contributions in relation to relevant apprentices”;

(b)

in paragraph (2A)—

(i)

in sub-paragraph (a) for “£3,532” substitute “£3,583”; and

(ii)

in sub-paragraph (b) for “£42,385” substitute “£43,000”;

(c)

in paragraph (3B)—

(i)

in sub-paragraph (a) for “£3,532” substitute “£3,583”; and

(ii)

in sub-paragraph (b) for “£42,385” substitute “£43,000”;

(d)

after sub-paragraph (3B) insert—

“(3C)

Subject to paragraphs (4) and (5), the prescribed equivalents of the upper secondary threshold for secondary Class 1 contributions in relation to relevant apprentices shall be—

(a)

where the earnings period is a month, £3,583;

(b)

where the earnings period is a year, £43,000;

(c)

where the earnings period is a multiple of a week, the amount calculated by dividing the figure in sub-paragraph (b) by 52 and multiplying the result by the corresponding multiple;

(d)

where the earnings period is a multiple of a month, the amount calculated by dividing the figure in sub-paragraph (b) by 12 and multiplying the result by the corresponding multiple;

(e)

in any other case, the amount calculated by dividing the figure in sub-paragraph (b) by 365 and multiplying the result by the number of days in the earnings period concerned.”;

(e)

in paragraph (4), for “ and paragraph (3B)(c) and (d)” substitute “, paragraph (3B)(c) and (d) and paragraph (3C)(c) and (d)”; and

(f)

in paragraph (5), for “ and paragraph (3B)(e)” substitute “, paragraph (3B)(e) and paragraph (3C)(e)”.

6Prescribed percentage of estimated benefit expenditure – Great Britain

Section 2(2) of the Social Security Act 1993 (payments into National Insurance Fund out of money provided by Parliament) has effect with respect to the tax year 2016-17 and the prescribed percentage of estimated benefit expenditure for the financial year ending with 31st March in that tax year shall be 5 per cent.

7Prescribed percentage of estimated benefit expenditure – Northern Ireland

Section 4(3) of the Social Security (Northern Ireland) Order 1993 (payments into Northern Ireland National Insurance Fund out of appropriated money) has effect with respect to the tax year 2016-17 and the prescribed percentage of estimated benefit expenditure for the financial year ending with 31st March in that tax year shall be 5 per cent.

Signature

Name

Name

Two of the Lords Commissioners of Her Majesty’s Treasury

Date

Explanatory note

(This note is not part of the Regulations)

These Regulations amend the Social Security Contributions and Benefits Act 1992 (c. 4) and corresponding provisions in the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7) (“the Acts”), and the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004) (“the Contributions Regulations”), with effect from 6th April 2016.

Regulation 2 amends sections 15 and 18 of the Acts to increase the upper profits limit, below which Class 4 National Insurance contributions (“NICs”) are payable at the main Class 4 percentage rate, from £42,385 to £43,000 per year.

Regulation 4 amends regulation 10 of the Contributions Regulations to increase the upper earnings limit, below which primary Class 1 NICs are payable at the main primary percentage, from £815 to £827 per week. It also specifies the maximum level of weekly earnings, known as the upper secondary threshold, below which secondary Class 1 NICs are payable at an age-related percentage in respect of earners in the under 21 age group (set out in section 9A of the Acts), and introduces a new upper secondary threshold below which secondary Class 1 NICs are payable at zero-rate in respect of relevant apprentices (set out in section 9B of the Acts).

Regulation 5 amends regulation 11 of the Contributions Regulations to refer to sections 9A and 9B of the Acts following the introduction of those sections by the National Insurance Contributions Act 2014 (c. 7) and the National Insurance Contributions Act 2015 (c. 5) respectively. It also provides for equivalents of the upper earnings limit and the upper secondary threshold for the under 21 age group where the earnings period in question is a month or a year, and introduces monthly, annual or irregular period equivalents of the upper secondary threshold for relevant apprentices.

Regulation 6 provides for section 2(2) of the Social Security Act 1993 (c. 3) to have effect for the tax year 2016-17. This allows money provided by Parliament to be paid into the National Insurance Fund up to a limit of 5 per cent of the estimated benefit expenditure for the financial year ending with 31st March 2017. Regulation 7 makes corresponding provision for Northern Ireland, by giving effect to article 4(3) of the Social Security (Northern Ireland) Order 1993 (S.I. 1993/592 (N.I. 2)).

In accordance with section 142(1) of the Social Security Administration Act 1992 (c. 5) a copy of the report by the Government Actuary, giving the Actuary’s opinion on the likely effect on the National Insurance Fund of the making of the Regulations, was laid before Parliament with the draft of these Regulations. A copy of the report can be found on the Government Actuary’s Department website at https://www.gov.uk/government/collections/uk-social-security-short-term-and-long-term-reports.

A Tax Information and Impact Note has not been prepared for this instrument as it gives effect to previously announced policy and it relates to routine changes to rates, limits and thresholds to a predetermined indexation formula.