The Social Security (Contributions) (Re-rating and National Insurance Funds Payments) Order 2014

Made10th March 2014

Coming into force6th April 2014

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, section 129 of the Social Security Administration (Northern Ireland) Act 1992 (“the Northern Ireland Administration Act”)2, section 2(2) and (3) of the Social Security Act 1993 (“the 1993 Act”)3 and article 4 of the Social Security (Northern Ireland) Order 1993 (“the 1993 Order”)4.

This Order is made as a result of the Treasury carrying out in the tax year 2013-14 a review of the general level of earnings in Great Britain in accordance with section 141(1) and (2) of the Administration Act5.

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 19926 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 and upper limits 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.

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 with 31^st March 2015, the Treasury think it expedient that an Order should be made under section 2(2) of the 1993 Act.

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 31^st March 2015, the Treasury think it expedient that an Order should be made under article 4(3) of the 1993 Order.

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 Act7, section 166(10A) of the Northern Ireland Administration Act8, section 2(8) of the 1993 Act and article 4(8) of the 1993 Order9 and approved by a resolution of each House of Parliament.

Citation, commencement and interpretation1

1

This Order may be cited as the Social Security (Contributions) (Re-rating and National Insurance Funds Payments) Order 2014 and comes into force on 6th April 2014.

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 199210.

Rate of and small earnings exception from Class 2 contributions2

In section 11 of the Act11 and the Northern Ireland Act12 (Class 2 contributions)—

a

in subsection (1) for “£2.70” substitute “£2.75”; and

b

in subsection (4) for “£5,725” substitute “£5,885”.

Amount of Class 3 contributions3

In section 13(1) of the Act13 and the Northern Ireland Act14 (Class 3 contributions) for “£13.55” substitute “£13.90”.

Lower and upper limits for Class 4 contributions4

In sections 15(3) and 18(1) and (1A) of the Act15 and the Northern Ireland Act16 (Class 4 contributions recoverable under the Income Tax Acts and under regulations)—

a

for “£7,755” (lower limit) in each place where it appears substitute “£7,956”; and

b

for “£41,450” (upper limit) in each place where it appears substitute “£41,865”.

Prescribed percentage of estimated benefit expenditure – Great Britain5

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 2014-15 and the prescribed percentage of estimated benefit expenditure for the financial year ending with 31^st March in that tax year shall be 5 per cent.

Prescribed percentage of estimated benefit expenditure – Northern Ireland6

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 2014-15 and the prescribed percentage of estimated benefit expenditure for the financial year ending with 31^st March in that tax year shall be 5 per cent.

Mark LancasterSam GyimahTwo of the Lords Commissioners of Her Majesty’s Treasury10th March 2014

EXPLANATORY NOTE

(This note is not part of the Order)

This Order, which comes into force on 6^th April 2014, 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 (c. 4) (“the Act”) from £2.70 to £2.75 and £13.55 to £13.90 respectively (articles 2(a) and 3). 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 £5,725 to £5,885 (article 2(b)).

The Order increases the lower and upper limits of profits specified in sections 15 and 18 of the Act, between which Class 4 contributions are payable at the main Class 4 percentage rate. The lower limit increases from £7,755 to £7,956 and the upper limit from £41,450 to £41,865 (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 (c. 7) are the same as those in the Act).

The Order provides for section 2(2) of the Social Security Act 1993 (c. 3) to have effect for the tax year 2014-15. 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 5 per cent. of the estimated benefit expenditure for the financial year ending 31^st March 2015 (article 5). The Order also makes corresponding provision for Northern Ireland (article 4(3) of the Social Security (Northern Ireland) Order 1993 (S.I. 1993/592 (N.I.2)) being the provision brought into effect) (article 6).

In accordance with section 142(1) of the Social Security Administration Act 1992 (c. 5), 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 https://www.gov.uk/government/collections/uk-social-security-short-term-and-long-term-reports.

A Tax Information and Impact Note has not been prepared for this instrument as it gives effect to previously announced policy and it relates to routine changes to rates, limits and thresholds to a predetermined indexation formula.