The Social Security (Contributions) (Re-rating and National Insurance Funds Payments) Order 2001

Made20th February 2001

Coming into force6th April 2001

Whereas the Treasury, as a result of carrying out in the tax year 2000–01 a review of the general level of earnings in Great Britain pursuant to section 141(1) and (2) of the Social Security Administration Act 19921 (“the Administration Act”), have determined that an Order should be made under that section amending Part I of the Social Security Contributions and Benefits Act 19922 by altering the amount of earnings below which an earner may be excepted from liability for Class 2 contributions, the amount of a Class 3 contribution and the lower and upper limits of profits or gains to be taken into account for Class 4 contributions:

And whereas the Treasury, with a view to adjusting the level at which the National Insurance Fund stands for the time being and having regard to the sums which may be expected to be paid from the Fund in the financial year ending 31st March 2002, think it expedient that an Order should be made under section 143(1) of the Administration Act3, altering the secondary percentage for secondary Class 1 contributions:

And whereas this Order makes provision for Northern Ireland corresponding to that mentioned in the two preceding recitals, pursuant to section 129 of the Social Security Administration (Northern Ireland) Act 19924:

And whereas the Treasury, 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 2002, think it expedient that an Order should be made under section 2(2) of the Social Security Act 1993 (“the 1993 Act”)5:

And whereas the Treasury, with a view to adjusting the level at which the Northern Ireland National Insurance Fund stands for the time being and having regard to estimated benefit expenditure for the financial year ending 31st March 2002, think it expedient that an Order should be made under Article 4(3) of the Social Security (Northern Ireland) Order 1993 (“the 1993 Order”)6:

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, section 166(10A) of the Social Security Administration (Northern Ireland) Act 19927, section 2(8) of the 1993 Act and Article 4(8) of the 1993 Order and approved by resolution of each House of Parliament:

Now, therefore, the Treasury, in exercise of the powers conferred by sections 141(4) and (5), 142(2) and (3), 143(1) and (4), 144(2) and 189(3) of the Administration Act, sections 129 and 165(11A) of the Social Security Administration (Northern Ireland) Act 19928, section 2(2) and (8) of the 1993 Act and Article 4(3) and (8) of the 1993 Order and now vested in them9, and of all other powers enabling them in that behalf, hereby make the following Order:

Citation, commencement and interpretation1

1

This Order may be cited as the Social Security (Contributions) (Re-rating and National Insurance Funds Payments) Order 2001 and shall come into force on 6th April 2001.

2

In this Order—

“the Act” means the Social Security Contributions and Benefits Act 1992;
“the Northern Ireland Act” means the Social Security Contributions and Benefits (Northern Ireland) Act 199210.

Secondary percentage for secondary Class 1 contributions2

In both section 9 of the Act11 and section 9 of the Northern Ireland Act12 (calculation of secondary Class 1 contributions) in subsection (2) for “12.2” (percentage rate) there shall be substituted “11.9”.

Small earnings exception from Class 2 contributions3

In both section 11 of the Act13 and section 11 of the Northern Ireland Act14 (Class 2 contributions) in subsection (4) (small earnings exception) for “£3,825” there shall be substituted “£3,955”.

Amount of a Class 3 contribution4

In both section 13(1) of the Act15 and section 13(1) of the Northern Ireland Act16 (amount of a Class 3 contribution) for “£6.55” there shall be substituted “£6.75”.

Lower and upper limits for Class 4 contributions5

In each of sections 15(3) and 18(1) of the Act17 and sections 15(3) and 18(1) of the Northern Ireland Act18 (Class 4 contributions recoverable under the Income Tax Acts and under regulations)—

a

for “£4,385” (lower limit) in each place where it appears, there shall be substituted “£4,535”; and

b

for “£27,820” (upper limit) there shall be substituted “£29,900”.

Prescribed percentage of estimated benefit expenditure—Great Britain6

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 2001–02 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.

Prescribed percentage of estimated benefit expenditure—Northern Ireland7

Article 4(3) of the Social Security (Northern Ireland) Order 1993 (payments into the Northern Ireland National Insurance Fund out of appropriated money) shall have effect with respect to the tax year 2001–02 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.

Clive BettsJim DowdTwo of the Lords Commissioners of Her Majesty’s Treasury20th February 2001

(This note is not part of the Order)

This Order reduces the rate of secondary Class 1 contributions, specified in section 9(2) of the Social Security Contributions and Benefits Act 1992 (“the Act”), from 12.2 per cent. to 11.9 per cent. It increases from £3,825 to £3,955 the amount of earnings below which an earner may be excepted from liability for Class 2 contributions, specified in section 11(4) of the Act. It also amends the amount of a Class 3 contribution specified in section 13(1) of the Act from £6.55 to £6.75 (Articles 2 to 4).

The Order amends, from £4,385 to £4,535 and from £27,820 to £29,900 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 5).

Articles 2 to 5 of the Order also make provision for Northern Ireland corresponding to that in the preceding two paragraphs (the section numbers are the same in the Social Security Contributions and Benefits (Northern Ireland) Act 1992).

The Order provides for section 2(2) of the Social Security Act 1993 to have effect for the tax year 2001–02. 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 2002 (Article 6). The Order also makes corresponding provision for Northern Ireland (Article 4(3) of the Social Security (Northern Ireland) Order 1993 being the provision brought into effect) (Article 7).

In accordance with sections 142(1) and 144(1) of the Social Security Administration Act 1992, a copy of the report by the Government Actuary (Cm. 4933) 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 9(2), 11(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 and limits increase broadly in line with the rise in price inflation, while the Class 4 upper profits limit increases in accordance with the announcement in the March 1999 Budget.