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National Insurance Act 1965

Status:

This is the original version (as it was originally enacted).

Part IInsured Persons and Contributions

Insured persons

1Description and classification of insured persons

(1)Subject to the provisions of this Act—

(a)every person who—

(i)immediately before the date of commencement of this Act was insured under the Act of 1946; or

(ii)on or after the said date, being over school leaving age and under pensionable age, is in Great Britain, and fulfils such conditions as may be prescribed as to residence in Great Britain,

shall be insured under this Act; and

(b)any person who at the said date is, or who subsequently becomes, insured under this Act shall thereafter continue throughout his life to be so insured.

(2)For the purposes of this Act, insured persons shall be divided into the following three classes, namely—

(a)employed persons, that is to say, persons gainfully occupied in employment in Great Britain, being employment under a contract of service;

(b)self-employed persons, that is to say, persons gainfully occupied in employment in Great Britain who are not employed persons;

(c)non-employed persons, that is to say, persons who are neither employed nor self-employed persons.

(3)Provision may be made by regulations for modifying the classification aforesaid in relation to cases where it appears to the Minister desirable by reason of the nature or circumstances of a person's employment or otherwise, and such regulations may in particular provide—

(a)for treating as an employed contributor's employment—

(i)employment under a public or local authority constituted in Great Britain notwithstanding that it is not employment under a contract of service ;

(ii)employment outside Great Britain in continuation of any employed contributor's employment;

(b)for treating as not being an employed contributor's employment or for disregarding—

(i)employment which is of a casual or subsidiary nature or in which the insured person is engaged only to an inconsiderable extent;

(ii)employment in the service, or for the purposes of the trade or business, or as partner, of the insured person's husband or wife ;

(iii)employment by a relative in the common home of the insured person and the employer;

(c)for treating a person's employment as continuing during periods of holiday, unemployment or incapacity for work and in such other circumstances as may be prescribed.

Contributions

2Source of funds

For the purpose of providing the funds required for paying benefit under this Act and for making any other payments which under this Act are to be made out of the National Insurance Fund, contributions shall be payable by insured persons, by employers and out of moneys provided by Parliament in accordance with sections 3 to 7 of this Act.

3Flat-rate contributions by insured persons and employers

Subject to the provisions of this Act—

(a)every employed person of any description set out in column 1 of Part I of Schedule 1 to this Act shall be liable to pay weekly contributions at the rate set out in relation to that description—

(i)unless his employment is a non-participating employment, in column 2 of the said Part I; or

(ii)if his employment is a non-participating employment, in column 3 of the said Part I;

(b)every employer of an employed person of any description set out in column 1 of Part II of the said Schedule 1, or of any person of any such description who is to be treated by virtue of the said Part II as an employed person, shall be liable to pay weekly contributions in respect of that person at the rate set out in relation to that description—

(i)unless that person's employment is a non-participating employment, in column 2 of the said Part II; or

(ii)if that person's employment is a non-participating employment, in column 3 of the said Part II;

(c)every self-employed person of any description set out in column 1 of Part III of the said Schedule 1 shall be liable to pay weekly contributions at the rate set out in relation to that description in column 2 of the said Part III;

(d)every non-employed person of any description set out in column 1 of Part IV of the said Schedule 1 shall be liable to pay weekly contributions at the rate set out in relation to that description in column 2 of the said Part IV.

4Graduated contributions by employed persons and employers

(1)Subject to the provisions of this Act, where in any income tax week there is made to or for the benefit of a person over the age of eighteen a payment on account of his remuneration in any one employment of an amount exceeding nine pounds (or the equivalent amount for remuneration not paid weekly), then if the employment was an employed contributor's employment and is not at the time of the payment a non-participating employment and that person either is under pensionable age or has not retired from regular employment—

(a)he shall be liable to pay a graduated contribution based on that payment; and

(b)his employer in the employment shall be liable to pay such a contribution in respect of him; and

(c)the amount of the graduated contribution payable by each of them shall be four and a quarter per cent. of the amount, up to nine pounds, by which that payment exceeds nine pounds (or of the equivalent amount for remuneration not paid weekly).

(2)In relation to graduated contributions, references in this Act to remuneration shall be taken to include, and to include only, any emoluments assessable to income tax under Schedule E (other than pensions), being emoluments from which tax under that Schedule is deductible, but shall apply to a payment of any such remuneration whether or not tax in fact falls to be deducted from that payment.

(3)Except in so far as regulations otherwise provide, the graduated contributions payable in any income tax week in respect of a person's remuneration shall be determined—

(a)by aggregating, and treating as a single payment of remuneration in one employment, all payments made in that week on account of remuneration in the same employment, or in any two or more employments under the same employer, except any employment such that graduated contributions are not payable in respect of it;

(b)by apportioning between the employments any single payment of remuneration in two or more employments under different employers, and (subject to the foregoing paragraph) treating as separate payments the parts apportioned to each employment.

(4)Where a person in any income tax year is paid remuneration from two or more employments, and the graduated contributions paid by him in respect of that remuneration exceed the prescribed amount, the excess—

(a)shall for the purposes of the powers conferred by section 14 of this Act be treated as representing contributions of the wrong class paid in error; and

(b)shall for the purpose of any right under this Act to benefit be treated as not properly payable.

(5)For the purpose of graduated contributions, any sums deducted (whether for contributions, for income tax or otherwise) from any payment of remuneration which is or would but for the deduction be made shall, except in so far as regulations otherwise provide, be treated as paid on account of the remuneration; and for the purpose aforesaid any payment of remuneration shall be disregarded in so far as it is directed by regulations to be treated as coming from sums comprised in a previous payment of remuneration or to be otherwise excluded from the computation of a person's remuneration.

(6)Provision shall be made by regulations for determining the graduated contributions payable where the whole or part of a person's remuneration in any employment is not paid weekly (and accordingly for determining the equivalent amounts mentioned in subsection (1) of this section), and may include provision for modifying subsection (3) of this section; and regulations may also, for the purpose of graduated contributions, make provision as to the intervals at which a person's remuneration or any part of it is to be treated as paid where it is not all paid at the same intervals of a week or longer and in the amounts due for those or for corresponding intervals.

(7)Regulations may also in relation to graduated contributions make provision—

(a)for calculating the amounts payable according to a prescribed scale or otherwise adjusting them so as to avoid fractional amounts or otherwise facilitate computation ; and

(b)for requiring that the liability in respect of a payment made in an income tax week, in so far as it depends on any conditions as to a person's age or retirement, shall be determined as at the beginning of the week or as at the end of it; and

(c)for securing that liability is not avoided or reduced by an employer following in the payment of persons employed any practice which is abnormal for their employments.

5Automatic increases in contributions

(1)Subject to subsection (2) of this section, in each of the three years 1970, 1975 and 1980 the rates of contribution payable by insured persons and employers shall be increased (for that and subsequent years) as follows:—

(a)beginning with the first Monday in April—

(i)an addition of fivepence per week shall be made to the rate of each contribution payable under section 3(a)(i) or (b)(i) of this Act or payable by a boy or girl under the age of eighteen under section 3(c) or (d) of this Act; and

(ii)an addition of tenpence per week shall be made to the rate of any other contribution payable under the said section 3 ; and

(b)beginning with 6th April, an addition of a quarter percent, shall be made to the rate at which graduated contributions are calculated on the relevant amount of remuneration.

(2)If the Minister with the consent of the Treasury by order so directs, the foregoing subsection shall have effect in relation to the increases to be made in any of the three years specified therein with the substitution for the references to fivepence, to tenpence and to a quarter of references to any less amounts specified by the order.

6Variation of rates of flat-rate contributions to stabilise employment

(1)Where it appears to the Treasury expedient so to do with a view to maintaining a stable level of employment, they may by order direct that contributions under section 3 of this Act, instead of being paid at the rates set out in Schedule 1 thereto, shall, for such periods as may be specified by or determined in accordance with the order, be paid at such higher or lower rates as may be so specified or determined, so, however, that an order under this section shall not provide for increasing or reducing the rate of any contribution as an employed person and the rate of the corresponding employer's contribution by different amounts.

(2)Contributions payable in accordance with any order under this section shall be deemed for the purposes of this Act to be contributions payable in accordance with the relevant provisions of the said section 3 and Schedule 1.

7Exchequer supplements

(1)Subject to the provisions of this Act, there shall be paid out of moneys provided by Parliament, in such manner and at such times as the Treasury may determine, for each of the following contributions, being contributions under section 3 of this Act, the amount (hereafter in this Act referred to as " the Exchequer supplement") hereinafter respectively specified, that is to say—

(a)for each contribution as an employed person of any description set out in column 1 of Part I of Schedule 1 to this Act, an amount equal to one quarter of the contribution for the time being set out in relation to that description in column 2 of the said Part I;

(b)for each contribution as the employer of an employed person of any description set out in column 1 of Part II of the said Schedule 1, or of any person of any such description who is to be treated by virtue of the said Part II as an employed person, an amount equal to one quarter of the contribution for the time being set out in relation to that description in column 2 of the said Part II;

(c)for each contribution as a self-employed or non employed person, an amount equal to one third of the contribution,

so, however, that the aggregate amount paid in any financial year for the Exchequer supplements in respect of contributions paid in that year shall not be less than one hundred and seventy million pounds.

(2)For the purposes of the foregoing subsection, the number of contributions of any class paid in any period shall be estimated in such manner as the Treasury may determine.

Supplementary provisions with respect to contributions

8Payment, number and class of contributions

(1)Subject to the provisions of this Act and of any regulations, no person shall be entitled to pay any contribution under this Act other than a contribution which he is liable to pay.

(2)If any employer or insured person fails to pay at or within the time prescribed for the purpose any contribution which he is liable under this Act to pay, he shall be liable on summary conviction to a fine not exceeding ten pounds.

(3)Apart from any graduated contribution—

(a)a person shall not be liable to pay more than one contribution as an insured person for any contribution week; and

(b)not more than one employer's contribution shall be payable in respect of any person for any contribution week.

(4)Subject to the subsequent provisions of this section, an insured person shall be deemed for the purposes of the provisions of this Part of this Act relating to contributions to be—

(a)an employed person as respects any contribution week during any part of which he is an employed person ;

(b)a self-employed person as respects any contribution week during any part of which he is a self-employed person and during no part of which he is an employed person;

(c)a non-employed person as respects any contribution week during no part of which he is either an employed or a self-employed person.

(5)Where as respects any employed contributor's employment—

(a)no services are rendered by an employed person in any contribution week; and

(b)no remuneration is paid wholly or partly in respect of any day in that week other than a day on which he either—

(i)is incapable of work and would but for the incapacity have been working; or

(ii)does not work in a normal week,

then that employment shall, in relation to that week, be disregarded for the purposes of subsections (3) and (4) of this section; and regulations may provide as respects any period during which no services are rendered by an employed person that for the purposes of this subsection any payments which he receives or is entitled (whether conditionally or not) to receive in any prescribed circumstances are or are not to be deemed to be remuneration paid in respect of any day in that period.

(6)Regulations may provide for disregarding for the purposes of subsections (3) to (5) of this section any employment in which a person engages or continues to be engaged solely or mainly for the purpose of acquiring or preserving a right or a larger right to benefit.

9Contributions by persons under age of sixteen

Any person who on his entry into insurance is or was under the age of sixteen shall not be liable to pay a contribution as a non-employed person for any period before his attaining the age of sixteen ; and—

(a)regulations may provide for crediting contributions to him for periods before his attaining that age, being periods for which he would have been liable to pay contributions as a non-employed person but for this section or, in the case of a period of absence from Great Britain, but for this section and any regulations made under section 103 of this Act;

(b)for the purpose of calculating the yearly average of the contributions paid by or credited to him—

(i)he shall not be deemed to attain or to have attained school leaving age before the date on which he attains the age of sixteen ;

(ii)there shall nevertheless be taken into account any contributions as an employed or self-employed person paid by him for periods before the beginning of the contribution year in which he attains the age of sixteen.

10Exception from liability for, and crediting of, contributions

(1)Subject to the provisions of subsection (2) of this section, regulations may provide for—

(a)excepting insured persons from liability to pay contributions under section 3 of this Act for periods—

(i)of unemployment or of incapacity for work;

(ii)of full-time education or of full-time unpaid apprenticeship;

(iii)when they are not in receipt (or are deemed in accordance with the regulations not to be in receipt) of an income exceeding two hundred and sixty pounds a year or such higher annual income as may from time to time be prescribed,

and for such other periods as may be prescribed;

(b)crediting such contributions to insured persons for—

(i)periods for which they are excepted from liability to pay them by virtue of the foregoing paragraph; and

(ii)the period between the beginning of the contribution year last preceding that in which they first became insured persons and their first entry into insurance.

(2)Regulations made under paragraph (a)(iii) of the foregoing subsection shall not provide for excepting a person from liability to pay contributions otherwise than on that person's own application, but may provide for so excepting a person with effect from any date not earlier than thirteen weeks before the date on which his application was made; and regulations made under paragraph (b) of that subsection shall not provide for crediting contributions to a person excepted from liability to pay them by virtue of the said paragraph (a)(iii) otherwise than for the purpose of entitling that person to unemployment benefit or sickness benefit for periods after he has ceased to be so excepted.

11Contributions of employed persons and employers

(1)Except where regulations otherwise prescribe, an employer liable to pay a contribution in respect of a person employed by him shall in the first instance be liable to pay also, on behalf and to the exclusion of that person—

(a)where the said contribution is a contribution under section 3 of this Act, any contribution under that section as an insured person payable by that person for the same contribution week;

(b)where the said contribution is a graduated contribution, any graduated contribution as an employed person payable by that person in respect of the same payment of remuneration;

and for the purposes of this Act contributions paid by an employer on behalf of an insured person shall be deemed to be contributions by the insured person.

(2)Notwithstanding any contract to the contrary, an employer shall not be entitled to deduct from the wages or other remuneration of a person employed by him, or otherwise to recover from such a person, any employer's contribution in respect of that person; and any employer who deducts or attempts to deduct the whole or any part of any employer's contribution in respect of any person from his wages or other remuneration shall be liable on summary conviction to a fine not exceeding ten pounds.

(3)An employer shall be entitled to recover from an insured person—

(a)in the case of a contribution under section 3 of this Act, subject to and in accordance with the provisions of section 12 of this Act and any regulations made under subsection (7) thereof; or

(b)in the case of a graduated contribution, subject to and in accordance with regulations which shall include the like provision as is made by so much of section 12(2) of this Act as precedes the proviso thereto,

the amount of any contribution paid or to be paid by the employer on behalf of that person.

(4)The Minister may, in such cases and on such conditions as he may prescribe, make an arrangement with any employer who is liable to pay employer's contributions under this Act and whose practice it is to engage persons through an employment exchange or other agency approved by the Minister whereby, in respect of persons so engaged by that employer or in the employ of that employer on the date of the arrangement, the performance of all or any of the duties required under this Act to be performed in connection with the payment of contributions by the employer in respect of those persons, whether on his own behalf or on behalf of those persons, shall be undertaken on behalf of the employer by the employment exchange or other agency.

(5)For the purposes of this and the next following section, references to a person's remuneration shall be construed, in relation to any period, as including any payments which by virtue of regulations made under section 8(5) of this Act are deemed for the purposes of the said section 8(5) to be remuneration paid to him in respect of any day in that period.

12Recovery by employer of insured person's flat-rate contributions

(1)The provisions of this section shall have effect with respect to the recovery by an employer from an insured person of the amount of any contribution under section 3 of this Act paid or to be paid by the employer on behalf of that person.

(2)Where the insured person receives from the employer any wages or other pecuniary remuneration in respect of an employed contributor's employment, the amount of any contribution paid or to be paid by the employer on behalf of the insured person shall, notwithstanding the provisions of any Act or any contract to the contrary, be recoverable by means of deductions from such wages or other remuneration due from the employer to that person and not otherwise:

Provided that—

(a)no such deduction may be made from any wages or remuneration other than such as are paid wholly or partly in respect of the contribution week or part of the contribution week for which the contribution is payable or may become payable as the case may be; and

(b)no such deduction may be made of any contribution not yet paid except where it is not payable until after the date when the said wages or remuneration are paid.

(3)Where the wages or other pecuniary remuneration of an insured person are paid at calendar monthly intervals, then, notwithstanding the provisions of subsection (2) of this section, it shall be lawful for the employer, at his option, to recover from each such payment of wages or remuneration, in lieu of the amount authorised to be recovered by him in accordance with the said provisions, an amount equal to one-twelfth of the contributions paid or to be paid by the employer on behalf of the insured person during the calendar year :

Provided that—

(a)where the employment commences after the beginning, or is to be terminated before the end, of a calendar year, the contributions paid or to be paid by the employer on behalf of the insured person during the calendar year shall be calculated for the purpose of ascertaining the said fraction of one-twelfth as though the employment continued throughout that year;

(b)in calculating the said fraction of one-twelfth, fractions of a penny may be disregarded;

(c)such adjustment (whether by way of repayment or increased or reduced deduction or otherwise) as may be necessary to secure that the amounts which have been recovered in accordance with this subsection are, when so adjusted, equal to the amounts which could have been recovered in accordance with the said subsection (2) shall be made between the employer and the insured person—

(i)on the termination of the employment, that is to say, subject to paragraph (d) of this proviso, on the day on which the employment actually comes to an end, whether the termination is in accordance with the terms of the contract or not and whether or not employment is to be resumed at a later date;

(ii)not later than three calendar months after any contribution week (being a week in respect of which an amount has been recovered by the employer under this subsection) during which the insured person is incapable of work and in respect of which, by virtue of section 8(5) of this Act, no contribution as an employed person was payable;

(iii)at intervals of not more than one year during the employment;

(d)for the purposes of this subsection, an employment in relation to which—

(i)the employer begins, or ceases, to recover amounts in accordance with this subsection; or

(ii)contributions on behalf of the insured person cease to be payable or Become payable at a different rate,

shall be treated as commencing, or terminating, upon that event.

(4)The amount of any contribution not yet paid shall not be recoverable except under and in accordance with subsection (2) or (3) of this section; and if any person contravenes or fails to comply with subsection (2) or paragraph (a) or (c) of the proviso to subsection (3) of this section, he shall for each offence be liable on summary conviction to a fine not exceeding ten pounds or, where the offence consists of continuing such a contravention or failure after conviction thereof, ten pounds together with a further ten pounds for each day on which it is so continued.

(5)Where the insured person does not receive any wages or other pecuniary remuneration from the employer but receives such remuneration from some other person, the amount of any contribution paid by the employer on behalf of the insured person shall (without prejudice to any other means of recovery) be recoverable from the insured person summarily as a civil debt if proceedings for the purpose are instituted within three months from the date on which the contribution was payable.

(6)Where the insured person does not receive any wages or other pecuniary remuneration in respect of an employed contributor's employment either from his employer or from any other person, the employer shall be liable to pay the contributions payable both by himself and the insured person and shall not be entitled to recover any part thereof from the insured person.

(7)Regulations with respect to such recovery as is mentioned in subsection (1) of this section may make provision additional to that made by this section and may vary or revoke any of the provisions of this section other than subsection (6) and so much of subsection (2) as precedes the proviso thereto.

(8)In its application to Scotland, subsection (5) of this section shall have effect as if the word " summarily" were omitted.

13Payment of contributions by Minister

Where a person is in receipt of a pension or allowance payable by the Minister by virtue of the Transfer of Functions (Ministry of Pensions) Order 1953, the Minister may with the consent of that person, notwithstanding anything in any Act, Royal Warrant, Order in Council, order or scheme, pay any contributions as a self-employed or non-employed person payable by that person, and deduct the amount so paid on his behalf from the pension or allowance payable to him.

14General provisions as to payment and collection of contributions, etc.

(1)Regulations may provide—

(a)for any matters incidental to the payment and collection of contributions under this Act, including the co-ordination thereof with the payment and collection of contributions under the Industrial Injuries Act and the modification in that behalf of that Act;

(b)for treating, for the purpose of any right to benefit, contributions paid after the due dates as paid on those dates or on such later dates as may be prescribed, or as not having been paid;

(c)for treating, for the purpose of any right to benefit, contributions payable by an employer on behalf of an insured person, but not paid, as paid where the failure to pay is shown not to have been with the consent or connivance of, or attributable to any negligence on the part of, the insured person;

(d)for treating contributions of the wrong class or at the wrong rate as paid on account of the contributions properly payable or on account of contributions under the Industrial Injuries Act, and for treating contributions under that Act which were not payable as paid on account of contributions under this Act, notwithstanding anything in that Act;

(e)for the return of contributions under this Act paid in error.

(2)Where under regulations made by virtue of subsection (1) of this section contributions under this Act, with or without contributions under the Industrial Injuries Act, are payable by means of adhesive stamps, those stamps (hereafter in this Act referred to as " insurance stamps ") shall be prepared and issued in such manner as the Postmaster General, with the consent of the Treasury, may direct; and the Postmaster General may—

(a)provide for the sale of insurance stamps through any post office; and

(b)by regulations provide for applying, with the necessary adaptations as respects insurance stamps, all or any of the provisions (including penal provisions) of the Stamp Duties Management Act 1891, section 9 of the Stamp Act 1891 and section 63 of the Post Office Act 1953.

(3)Regulations made by the Minister by virtue of this section providing for the payment of contributions, at the option of the persons liable to pay, either—

(a)by means of adhesive stamps ; or

(b)by some alternative method, the use of which involves greater expense in administration to the government departments concerned than would be incurred if the contributions were paid by means of such stamps,

may include provision for the payment to the Minister by any person who adopts any alternative method, and for the recovery by the Minister, of the prescribed fees in respect of the difference in the expense in administration.

15Power to combine payment and collection of contributions with that of income tax

(1)Regulations made under section 14(1) of this Act with the concurrence of the Commissioners of Inland Revenue may provide for graduated contributions to be paid, accounted for and recovered in like manner as, and with, income tax deducted from the emoluments of an office or employment by virtue of regulations under section 157 (pay as you earn) of the Income Tax Act 1952.

(2)Any such regulations may—

(a)make the like provision with respect to other contributions under this Act;

(b)apply or extend with or without modifications in relation to any contributions any of the provisions of the Income Tax Acts or of regulations under the said section 157;

(c)make provision for the appropriation of the payments made by any person between his liabilities in respect of income tax and contributions.

(3)Sections 46 and 47 of the Finance Act 1960 shall apply in relation to regulations made by virtue of this section as they apply in relation to regulations made under the said section 157 ; and if a person fails to pay at or within the time prescribed for the purpose any sums which he is required by regulations made by virtue of this section to pay, he shall be liable to be proceeded against and punished under section 8(2) of this Act as for a failure so to pay a contribution under this Act, without proof of his failure so to pay any particular contribution.

(4)The Commissioners of Inland Revenue shall at such times and in such manner as the Treasury may direct account to the Minister for, and pay to him, the sums estimated by the Commissioners, in such manner as may be so directed, to have been received by them as contributions in accordance with regulations made by virtue of this section.

(5)With a view to securing that contribution years begin in the case of all or any insured persons with the first Monday in April, regulations may provide for contribution years not so beginning to be on any occasion shorter than fifty-two or longer than fifty-three weeks so as to end immediately before that Monday, and may modify the contribution conditions for any benefit and any other provisions of this Act in such manner as appears to the Minister to be expedient to take account of the shorter or longer contribution year.

16Persons to be treated as employers

(1)In relation to persons who—

(a)are employed by more than one employer in any contribution week; or

(b)work under the general control or management of some person other than their immediate employer. and in relation to any other cases for which it appears to the Minister that special provision is needed, regulations may provide that for the purposes of this Act the prescribed person shall be treated as their employer; and regulations made by virtue of paragraph (b) of this subsection may provide for adjusting the rights between themselves of the person prescribed as the employer, the immediate employer and the persons employed.

(2)References in this Act to a person's employer shall not be construed as including his employer in any employment other than one which is an employed contributor's employment or, in the case of a person who is not, but would if he were under pensionable age be, an insured person, an employment which would be an employed contributor's employment in his case if he were under that age.

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