127For subsections (1) and (1A) of section 41 of that Act (reduced rates of Class 1 contributions) there shall be substituted the following subsections—
“(1)Subsections (1A) to (1C) apply where—
(a)the earnings paid to or for the benefit of an earner in any tax week are in respect of an employment which is contracted-out employment at the time of the payment, and
(b)the earner’s service in the employment is service which qualifies him for a pension provided by a salary related contracted-out scheme;
and in subsections (1A) and (1B) “the relevant part”, in relation to those earnings, means so much of those earnings as exceeds the current lower earnings limit but not the current upper earnings limit for that week (or the prescribed equivalents if the earner is paid otherwise than weekly).
(1A)The amount of the primary Class 1 contribution in respect of the relevant part of those earnings (“amount A”) shall be reduced by an amount equal to 1.6 per cent of that part.
(1B)The amount of any secondary Class 1 contribution in respect of the earnings (“amount B”) shall be reduced by an amount equal to 3 per cent of the relevant part of those earnings (“amount C”).
(1C)Where amount C exceeds amount B, the excess shall be set off against the amount which the secondary contributor is liable to pay (under paragraph 3 of Schedule 1 to the [1992 c. 4.] Social Security Contributions and Benefits Act 1992) in respect of amount A.”
Commencement Information
I1Sch. 7 para. 127 in force at 6.4.1999 by S.I. 1999/418, art. 2(2)(3)(a)