# The Social Security (Contributions) (Amendment No. 2) Regulations 2012, Note: Explanatory note


(This note is not part of the Regulations)
These Regulations amend the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004) (“the principal Regulations”).
The principal Regulations make provision for dealing with the reduced rate of National Insurance contributions (“NICs”), provided for in the Pensions Schemes Act 1993 (c. 48) (“the 1993 Act”), in relation to contracted out-employment. Certain types of contracted-out employment were abolished by the Pensions Act 2007 (c. 22); Part 2 of these Regulations makes consequential amendments, subject to savings, to the principal Regulations in order to reflect that abolition. Part 2 also makes minor amendments which are consequential to the abolition by the Finance Act 2011 (c. 11) of certain tax charges on registered pension schemes.
The principal Regulations provide for certain payments to be disregarded in the calculation of earnings for National Insurance purposes. Part 3 removes from the principal Regulations three disregards which, following a review by the Office of Tax Simplification, are no longer necessary.
Firstly, it removes the disregard from liability to pay Class 1A NICs on relocation expenses other than removal expenses where the employee started work in a new location before 6th April 1998.
Secondly, it removes from the computation of a person’s Class 1 NICs any payments in respect of employment as a mariner which is an interim payment in respect of earnings by way of an advance, a payment to some other person of any part of a mariner’s earnings as allocated by the mariner to that person or a payment of a special payment while sick abroad.
Thirdly, it removes the disregard from paying Class 1 NICs for certain apprentices and students coming to the UK who are not resident in the UK. The disregard is available where the UK employment occurs during a vacation from a course of full-time studies outside the UK and the temporary employment is of a nature similar or related to the course of study. It is also available where the UK employment is related to an apprenticeship which the individual is serving outside the UK and the employment in the UK began before the person was 25 and is of a nature similar or related to the apprenticeship outside the UK.
The provisions of the principal Regulations removed by regulation 7 of these Regulations were amended by a later statutory instrument. Regulation 10 makes a corresponding amendment to that later instrument in order to make sure that redundant legislation is removed from the statute book.
Part 4 of these Regulations amends the principal Regulations to reflect various recent changes to the rates in respect of NICs. Regulation 52A of the principal Regulations provides for the return of NICs paid in excess of the annual maximum prescribed in regulation 21 of the principal Regulations.
Regulation 8(a) reflects the increase from 6th April 2011 of the main rate of primary Class 1 NICs from 11% to 12% made by the National Insurance Contributions Act 2011 (c. 3).
Regulation 8(b) reflects a similar change to the reduced rates of primary Class 1 NICs in respect of members of contracted-out pension schemes. Section 41 of the 1993 Act provides for a reduction of 1.6% in the rates of primary Class 1 NICs in respect of members of certain salary related contracted-out pension schemes. As a result, the increase in the main rate of primary Class 1 NICs from 11% to 12% entails an increase in the percentage for primary Class 1 NICs due in respect of members of those contracted-out pension schemes from 9.4% to 10.4%.
Part 5 of these Regulations substitutes paragraphs 12A and 12B of Part 8 of Schedule 3 to the principal Regulations. It removes the reference to the Operational Allowance and Council Tax Relief being made and designated by the Secretary of State for Defence and instead refers to them being designated under a Royal Warrant made under the Armed Forces Act 2006 (c. 52) (“the 2006 Act”).
Part 5 also inserts a new paragraph 12C to Part 8 of Schedule 3 to the principal Regulations. The new paragraph 12C provides that payments of the Continuity of Education Allowance to or in respect of members of the armed forces of the Crown are to be disregarded in the calculation of earnings for National Insurance purposes. The Continuity of Education Allowance is an allowance that is designated as such under a Royal Warrant made under the 2006 Act.
Tax Information and Impact Notes covering Parts 3 and 5 of this instrument were published on 6th December 2011 alongside the autumn statement. They are available on the HMRC website at http://www.hmrc.gov.uk/thelibrary/tiins.htm. They remain an accurate summary of the impacts that apply to this instrument.
A Tax Information and Impact Note covering Parts 2 and 4 of this instrument will be published on the HMRC website at http://www.hmrc.gov.uk/thelibrary/tiins.htm.

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Source: https://www.legislation.gov.uk/uksi/2012/817/note (the official version)
Page: https://openlegislation.uk/social-security-contributions-amendment-no-2-regulations-2012/note
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.