The Social Security (Contributions) (Amendment No. 10) Regulations 2000

Explanatory Note

(This note is not part of the Regulations)

These Regulations amend the Social Security (Contributions) Regulations 1979 (S.I. 1979/591) (“the principal Regulations”).

The amendments made by these Regulations are consequent on the insertion of paragraph 3B (“paragraph 3B”) into Schedule 1 to the Social Security Contributions and Benefits Act 1992 (c. 4) (“the 1992 Act”). Paragraph 3B is inserted by section 77 of the Child Support, Pensions and Social Security Act 2000 (c. 19). It provides for a joint election by an employed earner and the secondary contributor that liability for secondary Class 1 contributions in respect of share option gains is to be transferred to the employed earner.

Regulation 1 provides for citation and commencement, and regulation 2 introduces the amendments.

Regulation 3 amends regulation 19(1) of the principal Regulations (payments to be disregarded) by adding a new sub-paragraph (zv). The new sub-paragraph relates to payments made for the benefit of an earner by way of the discharge of any liability for secondary Class 1 contributions which is transferred from the secondary contributor to the employed earner by an election. Such payments are to be disregarded in computing the amount of the employed earner’s earnings for the purposes of earnings-related contributions.

Regulation 4 amends the heading of regulation 46A of the principal Regulations (inserted by regulation 8 of S.I. 2000/2207).

Regulation 5 inserts a new regulation 46B in the principal Regulations, which introduces a new Schedule 1ZA in the principal Regulations (“Schedule 1ZA”).

Regulation 6 amends Regulation 6 in Schedule 1 to the principal Regulations to remove the obligation on employers to make deductions of secondary Class 1 contributions where an election transferring the liability for those contributions has been made.

Regulation 7 inserts a new Regulation 13ZA in Schedule 1 to the principal Regulations which imposes requirements on the secondary contributor to maintain certain records where an election has been made.

Regulation 8 amends the definition of “N” in the formula in Regulation 26A(3) in Schedule 1 to the principal Regulations to make it clear that in determining whether the amount which the secondary contributor is to pay to the Collector is less than £1,500 per month the amount of any secondary Class 1 contributions, liability for which has been transferred to the employed earner, is to be disregarded.

Regulation 9 inserts a new Regulation 28E in Schedule 1 to the principal Regulations which provides for certain Regulations of that Schedule to apply to the employed earner rather than the secondary contributor where an election has been made.

Regulation 10 inserts a new Regulation 30ZA in Schedule 1 to the principal Regulations which imposes a requirement on an employer to make an additional return at the end of the year where an election has been made.

Regulation 11 amends Regulation 32 of Schedule 1 to the principal Regulations (inspection of records) so that it applies to the records to be maintained by the secondary contributor under Regulation 13ZA of Schedule 1 to the principal Regulations.

Regulation 12 inserts Schedule 1ZA into the principal Regulations. Paragraph 1 of that Schedule prescribes the matters to be contained in an election to which that Schedule applies. Paragraph 2(1) provides that an election shall be made either in writing or in such electronic form and by such means of electronic communications as may be authorised by the Commissioners of Inland Revenue. Paragraph 2(2) provides that an election may be made jointly (as required by the provisions of paragraph 3B) if it is made in two separate documents provided that that made by the employed earner contains the matters set out in paragraph 1(1)(a) to (g) of the Schedule and that made by the secondary contributor contains the matters set out in paragraph 1(1)(a) to (f) and (h) of the Schedule. Paragraph 3 of the Schedule imposes requirements on the secondary contributor to notify the employed earner of certain matters where an election has been made. Paragraph 4 of the Schedule provides for interpretation.