Part I Contributions

Preliminary

1 Outline of contributory system.

(1)

The funds required—

(a)

for paying such benefits under this Act F1or any other Act as are payable out of the National Insurance Fund and not out of other public money; and

(b)

for the making of payments under section 162 of the Administration Act towards the cost of the National Health Service,

shall be provided by means of contributions payable to the F2Inland Revenue by earners, employers and others, together with the additions under subsection (5) below F3and amounts payable under section 2 of the Social Security Act 1993.

(2)

Contributions under this Part of this Act shall be of the following F4... classes—

(a)

Class 1, earnings-related, payable under section 6 below, being—

(i)

primary Class 1 contributions from employed earners; and

(ii)

secondary Class 1 contributions from employers and other persons paying earnings;

(b)

Class 1A, payable under section 10 below F5... by persons liable to pay secondary Class 1 contributions and certain other persons;

F6(bb)

Class 1B, payable under section 10A below by persons who are accountable to the Inland Revenue in respect of income tax on F7general earnings in accordance with a PAYE settlement agreement;

(c)

Class 2, flat-rate, payable F8... under section 11 below by self-employed earners;

(d)

Class 3, payable under section 13 F9or 13A below by earners and others voluntarily with a view to providing entitlement to benefit, or making up entitlement;

F10(da)

Class 3A, payable by eligible people voluntarily under section 14A with a view to obtaining units of additional pension; and

(e)

Class 4, payable under section 15 below in respect of the profits or gains of a trade, profession or vocation, or under section 18 below in respect of equivalent earnings.

(3)

The amounts and rates of contributions in this Part of this Act and the other figures in it which affect the liability of contributors shall—

(a)

be subject to regulations under sections 19(4) and 116 to 120 below; and

(b)

to the extent provided for by Part IX of the Administration Act be subject to alteration by orders made by the F11Treasury from year to year under that Part,

F12...

(4)

Schedule 1 to this Act—

(a)

shall have effect with respect to the computation, collection and recovery of contributions of Classes 1, 1A, F131B, F14, 3 and 3A, and otherwise with respect to contributions of those classes; and

(b)

shall also, to the extent provided by regulations made under section 18 below, have effect with respect to the computation, collection and recovery of Class 4 contributions, and otherwise with respect to such contributions, F15....

(5)

For each financial year there shall, by way of addition to contributions, be paid out of money provided by Parliament, in such manner and at such times as the Treasury may determine, amounts the total of which for any such year is equal to the aggregate of all statutory sick pay F16, statutory maternity pay, F17statutory paternity pay, statutory adoption pay F18, statutory shared parental pay F19, statutory parental bereavement pay and statutory neonatal care pay recovered by employers and others in that year, as estimated by the Government Actuary or the Deputy Government Actuary.

(6)

No person shall—

(a)

be liable to pay Class 1, Class 1A F20, Class 1B or Class 2 contributions unless he fulfils prescribed conditions as to residence or presence in Great Britain;

F21(aa)

be treated under section 11(5B) as having actually paid Class 2 contributions unless he fulfils such conditions;

(b)

be entitled to pay Class 3 contributions unless he fulfils such conditions; or

(c)

be entitled to pay Class 1, Class 1A F20, Class 1B or Class 2 contributions other than those which he is liable to pay, except so far as he is permitted by regulations to pay them.

F22(7)

Regulations under subsection (6) above shall be made by the Treasury.