2012 No. 807
Social Security

The Social Security (Contributions) (Re-rating) Order 2012

Made
Coming into force
This Order is made by the Treasury in exercise of the powers conferred by sections 141(4) and (5) and 142(2) and (3) of the Social Security Administration Act 1992 (“the Administration Act”)1 and section 129 of the Social Security Administration (Northern Ireland) Act 1992 (“the Northern Ireland Administration Act”)2.
This Order is made as a result of the Treasury carrying out in the tax year 2011-12 a review of the general level of earnings in Great Britain in accordance with section 141(1) and (2) of the Administration Act3.
The Treasury have determined that an Order should be made under section 141 of the Administration Act, amending Part 1 of the Social Security Contributions and Benefits Act 19924 by altering the rates of Class 2 and Class 3 contributions, the amount of earnings below which an earner may be excepted from liability for Class 2 contributions and the lower limit of profits to be taken into account for Class 4 contributions.

This Order makes provision for Northern Ireland, which corresponds to that mentioned in relation to Great Britain in the preceding recital, in accordance with section 129 of the Northern Ireland Administration Act.

A draft of this Order was laid before Parliament in accordance with the provisions of sections 141(3) and 190(1)(a) of the Administration Act5 and section 166(10A) of the Northern Ireland Administration Act6 and approved by resolution of each House of Parliament.

Citation, commencement and interpretation1.

(1)

This Order may be cited as the Social Security (Contributions) (Re-rating) Order 2012 and shall come into force on 6th April 2012.

(2)

In this Order—

“the Act” means the Social Security Contributions and Benefits Act 1992; and

“the Northern Ireland Act” means the Social Security Contributions and Benefits (Northern Ireland) Act 19927.

Rate of and small earnings exception from Class 2 contributions2.

In section 11 of the Act8 and the Northern Ireland Act9 (Class 2 contributions)—

(a)

in subsection (1) for “£2.50” substitute “£2.65”; and

(b)

in subsection (4) (small earnings exception) for “£5,315” substitute “£5,595”.

Amount of class 3 contributions3.

In section 13(1) of the Act10 and the Northern Ireland Act11 (amount of Class 3 contributions) for “£12.60” substitute “£13.25”.

Lower limit for Class 4 contributions4.

In sections 15(3) and 18(1) and (1A) of the Act12 and the Northern Ireland Act13 (Class 4 contributions recoverable under the Income Tax Acts and under regulations) for “£7,225” (lower limit) in each place where it appears, substitute “£7,605”.
Angela Watkinson
Michael Fabricant
Two of the Lords Commissioners of Her Majesty’s Treasury
EXPLANATORY NOTE
(This note is not part of the Order)

This Order, which comes into force on 6th April 2012, increases the rates of Class 2 and Class 3 contributions specified in sections 11(1) and 13(1) of the Social Security Contributions and Benefits Act 1992 (“the Act”) from £2.50 to £2.65 and from £12.60 to £13.25. It also increases the amount of earnings specified in section 11(4) of the Act, below which an earner may be excepted from liability for Class 2 contributions from £5,315 to £5,595 (Articles 2 and 3).

The Order increases from £7,225 to £7,605 the lower limit of profits specified in sections 15 and 18, above which Class 4 contributions are payable at the main Class 4 percentage rate (Article 4).

Articles 2 to 4 of the Order also make provision for Northern Ireland corresponding to that described in the preceding two paragraphs (the section numbers of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 are the same as those in the Act).

In accordance with section 142(1) of the Social Security Administration Act 1992, a copy of the report by the Government Actuary, giving the Actuary’s opinion on the likely effect on the National Insurance Fund of the making of the Order, including the amendments to sections 11(1), 11(4), 13(1), 15(3), 18(1) and 18(1A) of the Act, was laid before Parliament with the draft of this Order. A copy of the report can be found on the Government Actuary’s Department website at http://www.gad.gov.uk/Publications/index.html.

A Tax Information and Impact Note covering this instrument was published on 23 March 2011 alongside Budget 2011. This has been updated as a result of changes to the impacts as a result of this instrument and is available on the HMRC website at http://www.hmrc.gov.uk/thelibrary/tiins.htm.