Section 9: The age-related secondary percentage
101.Subsection (1) provides for amendments to the SSCBA 1992.
102.Subsection (2) amends section 9 (calculation of secondary Class 1 contributions) by introducing the concepts of a "relevant percentage" and the "age-related secondary percentage" alongside the secondary percentage.
103.Subsection (3) inserts a new section 9A (the age-related secondary percentage) into the SSCBA 1992.
104.Subsection (1) of new section 9A provides that where a secondary Class 1 contribution is payable, this section will apply to earnings paid in the tax week if the employed earner falls within an age group specified in column 1 of the table in subsection (3).
105.Subsection (2) of new section 9A provides that the age-related secondary percentage for the employed earner’s age group is specified in column 2 of the table in subsection (3).
106.Subsection (3) of new section 9A contains the table referred to above and provides that for employed earners under the age of 21, the age-related secondary percentage shall be 0%.
107.Subsection (4)(a) of new section 9A provides that the Treasury may make regulations to add an age group to column 1 of the table and to specify the age-related secondary percentage for that group in column 2 of the table. Under subsection (4)(b), the regulations may also reduce (or further reduce) the percentage for an age group already specified in column 1, whether for the whole age group or part of it.
108.Subsection (5) of new section 9A further provides that the percentage specified in regulations under subsection (4)(a) must be lower than the secondary percentage which is currently 13.8%.
109.Subsection (6) of new section 9A provides that a person is still to be regarded as liable for secondary Class 1 NICs even though the amount of the contribution is nil because the age-related secondary percentage is 0%. This provision removes the requirement for employers to pay secondary Class 1 NICs in respect of the earnings of employees under the age of 21 while ensuring that a technical liability for such contributions continues to arise on those earnings. As a result, the provision does not affect other legislation which relies on the existence of a secondary contributor, including the obligation to make statutory payments to employees such as Statutory Sick Pay and Statutory Maternity Pay.
110.Subsection (7) of new section 9A provides that the Treasury may make regulations to provide that, in relation to an age group specified in the table, there will be set for every tax year an “upper secondary threshold” for secondary Class 1 NICs and to specify the amount of that threshold for that year.
111.Subsection (8) of new section 9A applies the regulation-making power in section 5(4) to (6) of the SSCBA 1992 for the purposes of prescribing equivalents to the upper secondary threshold for earners paid otherwise than weekly, in the same way as they apply for the purposes of prescribing equivalents to the secondary threshold.
112.Subsection (9) of new section 9A provides that where a secondary Class 1 contribution is payable, the earner falls within an age group to whom an upper secondary threshold has been applied, and the earnings paid in the tax week exceed that upper secondary threshold (or the prescribed equivalent), the age-related secondary percentage will not apply to those earnings in so far as they exceed that threshold (or the prescribed equivalent). In that case, the secondary percentage rate will apply to that part of the earnings.
113.Subsection (10) of the new section 9A provides that references in new subsections 9A(7) to (9) to an age group are to be construed as including a part of an age group.
114.Subsection (4) inserts a reference to the “age-related secondary percentage” in section 122 (1) (interpretation of Parts 1 to 6) of the SSCBA 1992.
115.Subsection (5) amends section 176(1)(a) of the SSCBA 1992 to provide that regulations made under new section 9A(7) are subject to the affirmative procedure.
116.Subsections (6) to (10) amend the SSCB(NI)A 1992 to make equivalent provision to subsections (1) to (5) in relation to Northern Ireland.
117.Subsection (11) provides that the powers conferred on the Treasury under new section 9A and the amendments in new subsections (5) and (10) will come into force two months from the day the Act is passed.
118.Subsection (12) provides that, other than the provisions specified in subsection (11), the amendments made by the new section 9A will come into force on 6 April 2015.
