The Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2023

Draft Regulations laid before Parliament under section 176(1)(za), (zb) and (a) of the Social Security Contributions and Benefits Act 1992, section 172(11ZA), (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, article 4(8) of the Social Security (Northern Ireland) Order 1993 and section 12(2) of the National Insurance Contributions Act 2022 for approval by resolution of each House of Parliament.

Draft Statutory Instruments

2023 No.

Social Security

The Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2023

Made

***

Coming into force

6th April 2023

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 1992(1) (“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 1992(2) (“the Northern Ireland Contributions Act”), sections 141(4) and 142(2) and (3) of the Social Security Administration Act 1992(3) (“the Administration Act”), section 129 of the Social Security Administration (Northern Ireland) Act 1992(4) (“the Northern Ireland Administration Act”), section 2(2) and (3) of the Social Security Act 1993(5) (“the 1993 Act”), article 4(3) and (4) of the Social Security (Northern Ireland) Order 1993(6) (“the 1993 Order”) and section 8(4) to (8) of the National Insurance Contributions Act 2022(7) (“the NICA 2022”).

Regulations 3 and 4 are made as a result of the Treasury carrying out in the tax year 2022-23 a review of the general level of earnings in Great Britain in accordance with section 141(1) and (2) of the Administration Act(8).

The Treasury have determined that, in relation to Great Britain, regulations 3 and 4 should be made under section 141 of the Administration Act to amend Part 1 of the Contributions Act by altering the rate of, and the lower profits threshold for, Class 2 contributions and the amount of a Class 3 contribution.

Regulations 3 and 4 make 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 2024, the Treasury think it expedient that regulation 7 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 2024, the Treasury think it expedient that regulation 8 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)(za), (zb) and (a) of the Contributions Act(9), section 172(11ZA), (11ZB) and (11A) of the Northern Ireland Contributions Act(10), sections 141(3) and 190(1)(a) of the Administration Act(11), section 166(10A) of the Northern Ireland Administration Act(12), section 2(8) of the 1993 Act, article 4(8) of the 1993 Order(13) and section 12(2) of the NICA 2022 and approved by a resolution of each House of Parliament.

PART 1 General

Citation and commencement

1.  These Regulations may be cited as the Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2023 and come into force on 6th April 2023.

PART 2 Rates, limits and thresholds for National Insurance contributions

Interpretation

2.  In this Part—

“the Act” means the Social Security Contributions and Benefits Act 1992; and

“the Northern Ireland Act” means the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

Rate of and lower profits threshold for Class 2 contributions

3.  In section 11 of the Act(14) and the Northern Ireland Act(15) (Class 2 contributions)—

(a) in subsections (2) and (6) for “£3.15” substitute “£3.45”; and

(b) in subsection (4)(a) (lower profits threshold) for “£11,908” substitute “£12,570”.

Amount of a Class 3 contribution

4.  In section 13(1) of the Act(16) and the Northern Ireland Act(17) (Class 3 contributions) for “£15.85” substitute “£17.45”.

Amendment to the Social Security (Contributions) Regulations 2001

5.  In regulation 10 of the Social Security (Contributions) Regulations 2001(18) (earnings limits and thresholds) in the introductory words for “2022” substitute “2023”.

Amendments to the National Insurance Contributions Act 2022

6.  In section 8 of the National Insurance Contributions Act 2022 (upper secondary threshold for earnings: freeport tax site employees and armed forces veterans)—

(a) in subsection (1) for “year beginning with 6 April 2022” substitute “years beginning with 6 April 2022 and 6 April 2023”; and

(b) in subsection (2) for “and 6 April 2022” substitute “, 6 April 2022 and 6 April 2023”.

PART 3 National Insurance Funds

Prescribed percentage of estimated benefit expenditure – Great Britain

7.  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 2023-24 and the prescribed percentage of estimated benefit expenditure for the financial year ending with 31stMarch in that tax year shall be 5 per cent.

Prescribed percentage of estimated benefit expenditure – Northern Ireland

8.  Article 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 2023-24 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.

Name

Name

Two of the Lords Commissioners of His 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”) the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004) (“the Contributions Regulations”) and the National Insurance Contributions Act 2022 (c. 9) (“the NICA 2022”). The amendments have effect from 6th April 2023.

Regulation 3 increases the rate at which Class 2 National Insurance contributions (“NICs”) are payable by self-employed earners, specified in section 11(2) and (6) of the Acts, from £3.15 to £3.45 per week. It also increases the lower profits threshold specified in section 11(4)(a) of the Acts, which is the threshold at which liability to pay Class 2 NICs begins, from £11,908 to £12,570 per year.

Regulation 4 increases the amount of voluntary Class 3 NICs, specified in section 13(1) of the Acts, from £15.85 to £17.45.

Regulation 5 maintains at the same level as the previous year the weekly earnings limits and thresholds specified in regulation 10 of the Contributions Regulations, which are used for determining liability to Class 1 NICs and entitlement to associated state benefits.

Regulation 6 maintains at the same level as the previous year the upper secondary thresholds for earnings, and the prescribed equivalents for earners paid otherwise than weekly, for freeport tax site employees and armed forces veterans, specified in section 8 of the NICA 2022.

Regulation 7 provides for section 2(2) of the Social Security Act 1993 (c. 3) to have effect for the tax year 2023-24. 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 2024. Regulation 8 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 these Regulations, was laid before Parliament with the draft of these Regulations. A copy of the report can be found at https://www.gov.uk/government/collections/uk-social-security-short-term-and-long-term-reports; this is also available to purchase from the TSO Shop on their website at https://www.tsoshop.co.uk/ or by telephone on 0333 202 5070.

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. A Tax Information and Impact Note covering NICs thresholds and related changes to income tax thresholds (remaining at 2022-23 levels until 2027-28) is available at https://www.gov.uk/government/publications/the-personal-allowance-and-basic-rate-limit-for-income-tax-and-certain-national-insurance-contributions-nics-thresholds-from-6-april-2026-to-5-apr/income-tax-personal-allowance-and-the-basic-rate-limit-and-certain-national-insurance-contributions-thresholds-from-6-april-2026-to-5-april-2028.

(1)

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.

(2)

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”).

(3)

1992 c. 5; section 141(4) was amended by paragraph 16 of Schedule 1 to the National Insurance Contributions Act 2002 (c. 19) (“the NICA 2002”), paragraph 20 of Schedule 1 to the NICA 2015 and regulation 4(1) of S.I. 2022/1329. 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”).

(4)

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

(5)

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

(6)

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

(7)

2022 c. 9.

(8)

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

(9)

Section 176(1)(za) was inserted by section 7(5) of the Pensions Act 2007 (c. 22) (“the PA 2007”). 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.

(10)

Section 172(11ZA) was inserted by section 8(5)(b) of the PA 2007. 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.

(11)

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 to the WRPA 1999, paragraph 30 of Schedule 1 to the PA 2007 and paragraph 27 of Schedule 12 to the Pensions Act 2014 (c. 19).

(12)

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).

(13)

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

(14)

Section 11 was substituted by paragraph 3 of Schedule 1 to the NICA 2015. The figure in subsections (2) and (6) was last substituted by S.I. 2022/232. Section 11(4) was substituted by regulation 2(3) of S.I. 2022/1329.

(15)

Section 11 was substituted by paragraph 12 of Schedule 1 to the NICA 2015. The figure in subsections (2) and (6) was last substituted by S.I. 2022/232. Section 11(4) was substituted by regulation 3(3) of S.I. 2022/1329.

(16)

Section 13(1) was amended by paragraph 14(2) of Schedule 3 to the Transfer Act. The figure in subsection (1) was last substituted by S.I. 2022/232.

(17)

Section 13(1) was amended by paragraph 15(2) of Schedule 3 to the Transfer Order. The figure in subsection (1) was last substituted by S.I. 2022/232.

(18)

S.I. 2001/1004 was amended by section 1(2) of the National Insurance Contributions (Increase of Thresholds) Act 2022 (c. 16) and relevant amending instruments are S.I. 2009/111, 2011/940, 2015/577, 2016/343, 2021/157 and 2022/232.