The Social Security (Contributions) (Amendment No. 5) Regulations 2014

Amendment of the Social Security (Contributions) Regulations 2001

2.—(1) The Social Security (Contributions) Regulations 2001(1) are amended as follows.

(2) After regulation 94A (exception from Class 4 liability in respect of certain amounts chargeable to income tax under Schedule D)(2) insert—

“Liability of a partner in an AIFM firm for Class 4 contributions

94B.— (1) This regulation applies if an AIFM firm makes an election under section 863H of ITTOIA 2005 (election for special provision for alternative investment fund managers to apply)(3).

(2) Where a partner (“P”) in an AIFM firm allocates a profit (“the allocated profit”) to that firm as provided for in section 863I(2) of ITTOIA 2005 (allocation of profit to the AIFM firm), no Class 4 contributions are payable in respect of that allocated profit by virtue of the allocation.

(3) Paragraph (4) applies if all or part of the allocated profit vests in P at a time when P is carrying on the AIFM trade (whether as a partner in the AIFM firm or otherwise).

(4) The amount treated as a profit under section 863J(2) and (5) of ITTOIA 2005 (vesting of remuneration represented by the allocated profit) is to be treated for the purposes of the Act(4) as if it were profits—

(a) to which section 15(1) of the Act (class 4 contributions recoverable under the Income Tax Acts)(5) applies; and

(b) made by P in the tax year in which that profit is chargeable to income tax under Chapter 2 of Part 2 of ITTOIA 2005.

(5) In this regulation—

“AIFM firm” and “AIFM trade” have the meanings given in section 863H(3) and (4) of ITTOIA 2005; and

“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005.”.

(1)

S.I. 2001/1004.

(2)

Regulation 94A was inserted by regulations 2 and 4 of S.I. 2003/2958.

(3)

“ITTOIA 2005” is defined in paragraph 5 as the Income Tax (Trading and Other Income) Act 2005 (c. 5). Sections 863H to 863L were inserted by paragraph 15 of Schedule 17 to the Finance Act 2014 (c. 26).

(4)

“The Act” is defined in regulation 1(2) as the Social Security Contributions and Benefits Act 1992 (c. 4). Regulation 156(3) provides that references to enactments applying only to Great Britain shall be construed as including a reference to corresponding enactments applying to Northern Ireland, which in this case is the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7).

(5)

Section 15(1) has been amended by sections 882(1) and 884 of, and paragraphs 423 and 424 of Schedule 1 to, and Schedule 3 to, ITTOIA 2005.