The Social Security (Contributions) (Re-rating and National Insurance Fund Payments) Order 1999

Statutory Instruments

1999 No. 263

SOCIAL SECURITY

The Social Security (Contributions) (Re-rating and National Insurance Fund Payments) Order 1999

Made

4th February 1999

Coming into force

6th April 1999

Whereas the Secretary of State for Social Security, as a result of carrying out in the tax year 1998–99 a review of the general level of earnings pursuant to section 141(1) and (2) of the Social Security Administration Act 1992(1) (“the Administration Act”), has determined that an Order should be made under that section amending Part I of the Social Security Contributions and Benefits Act 1992(2) (“the Contributions and Benefits Act”) by altering the rates of Class 2 and Class 3 contributions, the amount of earnings below which an earner may be excepted from liability for Class 2 contributions and the lower and upper limits of profits or gains to be taken into account for Class 4 contributions:

And whereas the Secretary of State, 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 31st March 2000, thinks it expedient that an Order should be made under section 2(2) of the Social Security Act 1993 (“the 1993 Act”)(3):

And whereas a draft of the following Order was laid before Parliament in accordance with the provisions of sections 141(3) and 190(1) of the Administration Act and section 2(8) of the 1993 Act and approved by resolution of each House of Parliament:

Now, therefore, the Secretary of State for Social Security in exercise of powers conferred by sections 141(4) and (5), 142(2) and 189(1) and (3) of the Administration Act and, with the consent of the Treasury, section 2(2) and (8) of the 1993 Act and of all other powers enabling him in that behalf, hereby makes the following Order:

Citation, commencement and interpretation

1.—(1) This Order may be cited as the Social Security (Contributions) (Re-rating and National Insurance Fund Payments) Order 1999 and shall come into force on 6th April 1999.

(2) In this Order “the Act” means the Social Security Contributions and Benefits Act 1992.

Rate of, and small earnings exception from, Class 2 contributions

2.  In section 11 of the Act (Class 2 contributions)(4)–

(a) in subsection (1) (weekly rate) for “£6.35”, substitute “£6.55”;

(b) in subsection (4) (small earnings exception) for “£3,590”, substitute “£3,770”.

Amount of Class 3 contributions

3.  In section 13(1) of the Act (amount of Class 3 contributions)(5) for “£6.25”, substitute “£6.45”.

Lower and upper limits for Class 4 contributions

4.  In sections 15(3) and 18(1) of the Act (Class 4 contributions recoverable under the Income Tax Acts and under regulations)(6)–

(a) for “£7,310” (lower limit) in each place where it appears, substitute “£7,530”;

(b) for “£25,220” (upper limit) in both places where it appears, substitute “£26,000”.

Prescribed percentage of estimated benefit expenditure

5.  Section 2(2) of the Social Security Act 1993 (payments into the National Insurance Fund out of money provided by Parliament) shall have effect with respect to the tax year 1999–2000 and the prescribed percentage of estimated benefit expenditure for the financial year ending with 31st March in that tax year shall be 2 per cent.

Signed by authority of the Secretary of State for Social Security.

Stephen C. Timms

Minister of State,

Department of Social Security

2nd February 1999

We consent,

Clive J. C. Betts

Bob Ainsworth

Two of the Lords Commissioners of Her Majesty’s Treasury

4th February 1999

Explanatory Note

(This note is not part of the Order)

This Order increases the rates of Class 2 and Class 3 contributions specified in sections 11(1) and 13(1) of the Social Security Contributions and Benefits Act 1992 (“the Act”) from £6.35 to £6.55 and from £6.25 to £6.45 respectively. It also increases from £3,590 to £3,770 the amount of earnings specified in section 11(4) below which an earner may be excepted from liability for Class 2 contributions (articles 2 and 3).

The Order increases, from £7,310 to £7,530 and from £25,220 to £26,000 respectively, the lower and upper limits of profits or gains specified in sections 15(3) and 18(1) of the Act between which Class 4 contributions are payable (article 4).

The Order provides for section 2(2) of the Social Security Act 1993 to have effect for the tax year 1999–2000. It also provides that the amount of any money that may be provided by Parliament to be paid into the National Insurance Fund in that year shall not exceed in aggregate 2 per cent of the estimated benefit expenditure for the financial year ending 31st March 2000 (article 5).

In accordance with section 142(1) of the Social Security Administration Act 1992, a copy of the report by the Government Actuary (Cm. 4199) 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 11(1) and (4), 13(1), 15(3) and 18(1) of the Act, was laid before Parliament with the draft of this Order.

This Order does not impose any new costs on business. Certain contribution rates, thresholds and limits increase broadly in line with the rise in price inflation.

(1)

1992 c. 5.

(2)

1992 c. 4.

(3)

1993 c. 3.

(4)

Section 11 was further amended by article 2 of S.I. 1998/469 from 6th April 1998.

(5)

Section 13 was further amended by article 3 of S.I. 1998/469 from 6th April 1998.

(6)

The lower and upper limits were further amended by article 4 of S.I. 1998/469 from 6th April 1998.