2011 No. 797

Social Security

The Social Security (Contributions) (Amendment No. 3) Regulations 2011

Made

Laid before Parliament

Coming into force

These Regulations are made by the Treasury with the concurrence of the Secretary of State and the Department for Social Development in relation to regulation 7 and to regulation 2 insofar as it relates to the amendments made by regulation 71.

The powers exercised by the Treasury are those conferred by sections 3(2), 3(3), 13(1) and 175(4) of, and paragraphs 7B(1) and 7B(2)(d), 8(1)(ia), 8(1)(q) and 8(1A) of Schedule 1 to, the Social Security Contributions and Benefits Act 19922, and sections 3(2) and (3), 13(1), 171(4) and (10) of, and paragraphs 7B(1) and (2)(d), 8(1)(ia), 8(1)(q) and 8(1A) of Schedule 1 to, the Social Security Contributions and Benefits (Northern Ireland) Act 19923 and now exercisable by them.

PART 1General

Citation and commencement1

1

These Regulations may be cited as the Social Security (Contributions) (Amendment No. 3) Regulations 2011 and shall come into force on 6th April 2011.

2

Part 3 has effect in relation to Class 2 contributions in respect of contribution weeks beginning on or after 10th April 2011.

Amendment of the Social Security (Contributions) Regulations 20012

The Social Security (Contributions) Regulations 20014 are amended as follows.

PART 2Repayment of Class 1A Contributions

Repayment of Class 1A contributions

3

After regulation 55 insert—

Repayment of Class 1A contributions: certain earnings no longer treated as earnings for income tax purposes55A

1

Subject to regulations 51 and 57 and to paragraph (2), where an officer of Revenue and Customs is satisfied that an amount treated as earnings in respect of which a Class 1A contribution was paid is no longer treated as earnings in accordance with the provisions of sections 100A and 100B of the Income Tax (Earnings and Pensions) Act 2003 (homes outside UK owned through company etc)5, the amount paid shall be repaid to the person who paid that contribution.

2

The repayment of all or part of a Class 1A contribution under paragraph (1) is subject to the condition that an application shall be made in writing to HMRC on or before 6th April 2015.

4

In regulation 51—

a

in each place it occurs for “the Board” substitute “HMRC”;

b

in paragraph (2) for “to any person under regulation 55(1)” substitute “to any person under regulation 55(1), or regulation 55A,”.

5

In regulation 57(1) after “52A” insert “, 55, 55A”.

PART 3Payment of Class 2 and Class 3 Contributions

Payment of Class 2 and Class 3 Contributions6

In regulation 89—

a

in paragraph (1) after “(2),” insert “(2A),”;

b

after paragraph (1) insert—

1A

Where a person who is liable to pay a Class 2 contribution in respect of any contribution week in a biannual contribution period has notified HMRC of his liability in accordance with the provisions of regulation 87 or 87A HMRC shall, no later than the notification date, issue to him a written notice of the number of contribution weeks in that biannual contribution period and of the weekly rate at which the contribution is payable.

c

for paragraph (2) substitute—

2

Where a person who is liable to pay a Class 2 contribution in respect of any contribution week in a biannual contribution period has notified HMRC of his liability in accordance with the provisions of regulation 87 or 87A that person shall, subject to paragraph (4) below, pay to HMRC—

a

the amount of contributions for which he is liable in relation to the first biannual contribution period not later than 31st January following the end of that period;

b

the amount of contributions for which he is liable in relation to the second biannual contribution period not later than 31st July following the end of that period.

d

after paragraph (2) insert—

2A

Where—

a

a person who is entitled, although not liable, to pay a Class 2 contribution in any year has notified HMRC of his entitlement in accordance with the provisions of regulation 87 or 87A; and

b

HMRC has, no later than the notification date, issued him with written notice of the amount he may pay in respect of his entitlement in that period;

that person may, if the person so wishes, pay to HMRC a sum not exceeding that amount.

e

in paragraph (3)—

i

in sub-paragraph (a) omit “who is entitled although not liable to pay a Class 2 contribution, or”;

ii

after “regulation 87” insert “or 87A”;

iii

in each place it occurs for “the Board” substitute “HMRC”;

f

in paragraph (4)—

i

in the words following sub-paragraph (b) for “28 days after the specified date of notification” substitute “the date for payment specified in the notice”;

ii

in each place it occurs, for “the Board” substitute “HMRC”;

g

for paragraphs (5) to (7) substitute—

5

This paragraph applies to a person who—

a

has notified HMRC in accordance with the provisions of regulation 87 or 87A that—

i

he is liable to pay a Class 2 contribution in respect of one or more weeks in a biannual contribution period, or

ii

he is entitled although not liable to pay a Class 2 contribution in a biannual contribution period, or is entitled to pay a Class 3 contribution in a contribution quarter; and

b

has—

i

not, by the notification date, had written notice issued to him in respect of that week or weeks of the kind referred to in paragraph (2A);

ii

not had written notice issued to him in respect of that week or weeks of a kind mentioned in paragraph (3) and more than 14 days have elapsed since the end of the contribution quarter in question; or

iii

notified HMRC in accordance with regulation 87 or 87A that he has ceased to be liable to pay Class 2 contributions or ceased to be entitled to pay Class 2 or Class 3 contributions as the case may be.

6

This paragraph applies to a person—

a

to whom a written notice of the kind referred to in paragraph (1A), (2A), (3) or (4) has been issued and who has informed HMRC immediately—

i

that the notice he received has since been lost, destroyed or defaced, or

ii

that he disputes the amount of contributions which he is liable or entitled to pay in the biannual contribution period or contribution quarter in question; or

b

who—

i

in relation to a notice of the kind referred to in paragraph (1A) or (2A) has notified HMRC not later than 28 days after the notification date that he has not received such a notice;

ii

in relation to a notice of the kind referred to in paragraph (3) has notified HMRC not later than 28 days after the end of the contribution quarter in question that he has not received such a notice.

7

In this regulation—

a

“biannual contribution period” means either the first biannual contribution period or the second biannual contribution period;

b

“first biannual contribution period” means the 26 contribution weeks beginning with the first day of the first contribution week of any year;

c

“second biannual contribution period” means the period of not less than 26 contribution weeks commencing on the first day of the twenty seventh contribution week in that year;

d

“contribution quarter” means one of the four periods of not less than 13 contribution weeks commencing on the first, fourteenth, twenty-seventh or fortieth contribution week, as the case may be, in any year;

e

“notification date” means—

i

in relation to the first biannual contribution period, 1st December following the end of that period;

ii

in relation to the second biannual contribution period, 1st June following the end of that period.

PART 4Experts seconded to a body of the European Union

Experts seconded to a body of the European Union7

In Part 8 of Schedule 3 (travelling, relocation and other expenses and allowances to be disregarded in the calculation of employed earner’s earnings) after paragraph 15 insert—

Experts seconded to a body of the European Union15A

A payment in respect of subsistence allowances paid—

a

by a body of the European Union that is located in the United Kingdom and listed in the table below;

b

to persons who, because of their expertise in matters relating to the subject matter of the functions of the body, are seconded to the body by their employers.

Bodies of the European Union located in the United Kingdom

The European Medicines Agency6

The European Police College7

The European Banking Authority8

Michael FabricantAngela WatkinsonTwo of the Lords Commissioners of Her Majesty’s Treasury

The Secretary of State concurs

Signed by authority of the Secretary of State for Work and Pensions

Steve WebbMinister of StateDepartment for Work and Pensions

The Department for Social Development concurs

Sealed with the Official Seal of the Department for Social Development on 10th March 2011

seal_r00001Anne McClearyA senior officer of the Department for Social Development
EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Social Security (Contributions) Regulations 2001 (“the 2001 Regulations”). They come into force on 6th April 2011.

Part 2 concerns the repayment of Class 1A National Insurance Contributions (NICs). Regulation 3 inserts a new regulation 55A into the 2001 Regulations. Regulation 55A provides for repayment of a Class 1A NICs which were paid on an amount treated as earnings which is now exempt from income tax by virtue of the provisions at sections 100A and 100B of the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA”). Those provisions in ITEPA introduced an exemption from income tax in respect of benefits in kind provided for certain employees and office holders in the form of qualifying overseas holiday homes. The income tax exemption is treated as always having had effect. Regulation 55A provides for the repayment of Class 1A NICs where an officer of Revenue and Customs is satisfied that the contribution was paid on the same amount treated as earnings as is now exempt under the ITEPA provisions subject to the condition that an application is made in writing to HMRC on or before 6th April 2015.

Regulations 4 and 5 make consequential amendments to regulations 51 and 57 of the 2001 Regulations. Regulation 57 is also amended to include a cross reference to regulation 55, to clarify the existing position that regulation 57 is subject to regulation 55.

A full impact assessment has not been produced for this Part of the instrument as no impact is foreseen on the private or voluntary sectors.

Part 3 concerns the payment of Class 2 and Class 3 NICs.

Regulations 89 and 90 of the 2001 Regulations set out the time for payment of Class 2 and Class 3 NICs.

Regulation 6 of these Regulations amends regulation 89 in relation to those who are liable or entitled to pay Class 2 NICs. They have effect in relation to Class 2 NICs in respect of contribution weeks beginning on or after 10th April 2011.

HMRC currently send individuals who are liable, or entitled, to pay Class 2 NICs and who do not pay by direct debit a quarterly notice informing them of the amount they are liable, or entitled, to pay. Such notices will now be sent on a biannual basis.

Those liable to pay Class 2 NICs in relation to “biannual contribution periods” (as defined in the new regulation 89(7)) will be required to pay those contributions on the dates specified in the new regulation 89(2) or, where the individual informs HMRC that no notice has been received, the date specified in a notice sent to the individual by HMRC in accordance with paragraph 89(4). Those entitled, but not liable, to pay Class 2 Contributions will be entitled to pay such contributions in accordance with new regulation 89(2A).

A full Impact Assessment of the effect that this Part of the instrument will have on the costs of business and the voluntary sector is available from the HMRC website at http://www.hmrc.gov.uk/better-regulation/ia.htm

Part 4 concerns subsistence allowances paid to experts seconded to a body of the European Union.

Regulation 7 adds a new paragraph 15A to Part 8 of Schedule 3 to the 2001 Regulations. The new paragraph 15A provides that payments of subsistence allowances paid by specified bodies of the European Union located in the United Kingdom are to be disregarded in the calculation of earnings for National Insurance purposes. The payments are those made to persons who are seconded to a specified body because of their expertise in matters relating to the subject matter of the functions of the body.

A full and final Impact Assessment has not been produced for this Part of the instrument as a negligible impact on the private or voluntary sectors is foreseen.