Explanatory note
(This note is not part of the Order)
This Order increases the amounts of weekly earnings specified in the earnings brackets in section 4(6B) and (6E) of the Social Security Act 1975 (“the Act”), determining the appropriate percentage rate at which Class 1 contributions are payable under that Act (article 2). In both subsections, the increases in respect of Bracket 1 are from £69.99 to £74.99 and in respect of Bracket 2 from £70.00 and £104.99 to £75.00 and £114.99. In subsection (6B), the increase in respect of Bracket 3 is from £105 to £115. In subsection (6E), the increases in respect of Bracket 3 are from £105.00 and £154.99 to £115.00 and £164.99 and, in respect of Bracket 4, from £155.00 to £165.00.
The Order increases the rates of Class 2 and Class 3 contributions payable under the Act from £4.05 to £4.25 and from £3.95 to £4.15 respectively (articles 3(a) and 4). It increases from £2,250 to £2,350 the amount of earnings below which an earner may be excepted from liability for Class 2 contributions (article 3(b)). It also increases, from £4,750 to £5,050 and from £15,860 to £16,900, the lower and upper limits of profits or gains between which Class 4 contributions are payable (article 5).
This Order also increases the percentage rates of the appropriate national health service allocation in the cases of primary Class 1 contributions (from 0.95 to 1.05 per cent.) and of secondary Class 1 contributions (from 0.8 to 0.9 per cent.). It contains a direction that there shall be no appropriate employment protection allocation in relation to any tax year after 1988–89.
In accordance with sections 121(1) and 123A(6A) of the Act, a copy of the report by the Government Actuary (Cm. 537), giving his opinion on the likely effect on the National Insurance Fund of the making of the Order in so far as it amends sections 4(6B) and (6E), 7, 8(1), 9(2) and 10(1) of the Act, was laid before Parliament with a draft of this Order.