Explanatory note

These Regulations make an amendment to the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004) (“the Contributions Regulations”).

Schedule 3 to the Contributions Regulations provides for certain payments to be disregarded in the calculation of earnings for the purpose of establishing liability to Class 1 contributions (“NICs”).

Regulation 2(2) inserts a new paragraph 8B into Part 8 of Schedule 3 to the Contributions Regulations so that any payment of expenses made to voluntary office holders and in respect of which no liability to income tax arises by virtue of section 299B of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (“ITEPA”) is also disregarded for this purpose.

Regulation 2(2) makes an amendment to the Contributions Regulations to take into account new provisions in ITEPA inserted by resolution number 14, passed by the House of Commons on 17th March 2020 following the budget held on 11th March. The resolution has temporary statutory effect by virtue of section 1 of the Provisional Collection of Taxes Act 1968 (c. 2). It inserts a new section 299B into ITEPA, which provides that no liability to income tax arises in respect of a payment to a person who holds a voluntary office if the payment is in respect of reasonable expenses incurred in carrying out the duties of that office.

The provisions of the resolution correspond to provisions contained in clause 14 of Finance Bill 2020, as introduced to and published by the House of Commons on 19th March 2020. Assuming that the clause is not rejected during the passage of the Bill through Parliament, those provisions will come into force when the Bill receives Royal Assent. If the clause is rejected during passage of the Bill, with the effect that the new section 299B is not inserted into ITEPA, this instrument would be revoked.

A Tax Information and Impact Note has not been prepared for these Regulations as they contain no substantive changes to tax policy.

A Tax Information and Impact Note covering the amendments to tax policy connected to this instrument was published on 12th July 2019 alongside the draft Finance Bill 2019. It is available on the website at https://www.gov.uk/goverment/publications/income-tax-and-the-treatment-of-expenses-for-voluntary-office-holders. It remains an accurate summary of the impacts that apply to this instrument.