2016 No. 267
Social Security

The Social Security Benefit (Computation of Earnings) (Amendment) Regulations 2016

Made
Laid before Parliament
Coming into force
These Regulations are made by the Treasury with the concurrence of the Secretary of State for Work and Pensions in exercise of the powers conferred by sections 3(2) and (3), 122(1) and 175(3) of the Social Security Contributions and Benefits Act 19921.
In accordance with section 173(1)(b) of the Social Security Administration Act 19922, the Social Security Advisory Committee has agreed that proposals in respect of these Regulations should not be referred to it.

Citation and commencement1.

These Regulations may be cited as the Social Security Benefit (Computation of Earnings) (Amendment) Regulations 2016 and come into force on 6th April 2016.

Amendments to the Social Security Benefit (Computation of Earnings) Regulations 19962.

(1)

The Social Security Benefit (Computation of Earnings) Regulations 19963 are amended as follows.

(2)

In regulation 2(1) (interpretation)—

(a)

omit the definition of “lower rate”;

(b)

at the appropriate places insert—
““basic rate” means the rate of income tax of that name determined in pursuance of section 6(2) of the Income Tax Act 20074;”;
““Scottish basic rate” means the rate of income tax of that name calculated in accordance with section 6A of the Income Tax Act 20075;”; and
““Scottish taxpayer” has the same meaning as in Chapter 2 of Part 4A of the Scotland Act 19986;”.

(3)

In regulation 4 (notional earnings)—

(a)

omit paragraph (2);

(b)

in paragraph (3) omit “or (2)”; and

(c)

in paragraph (3)(a)—

(i)

for “lower rate or, as the case may be, the lower rate and the basic rate” substitute “basic rate, or in the case of a Scottish taxpayer, the Scottish basic rate,”;

(ii)

for “personal relief to which the claimant is entitled under sections 257(1), 257A(1) and 259 of the Income and Corporation Taxes Act 1988 (personal reliefs) as is” substitute “personal reliefs to which the claimant is entitled under Chapters 2, 3 and 3A of Part 3 of the Income Tax Act 20077 as are”;

(iii)

for “lower rate” in the third place it appears substitute “basic rate, or the Scottish basic rate,”; and

(iv)

for “relief” in the second place it appears substitute “reliefs”.

(4)

In regulation 14(1) (deduction of tax and contributions for self-employed earners)—

(a)

for the words from “lower rate” the first time it appears to “as is” substitute “basic rate, or in the case of a Scottish taxpayer, the Scottish basic rate, of tax less only the personal reliefs to which the claimant is entitled under Chapters 2, 3 and 3A of Part 3 of the Income Tax Act 2007 as are”;

(b)

for “lower rate” in the third place it appears substitute “basic rate, or the Scottish basic rate,”; and

(c)

for “relief” in the second place it appears substitute “reliefs”.

(5)

In paragraph 6 of Schedule 1 (sums to be disregarded in the calculation of earnings) for “or, as the case may be,” substitute “, section 81 of the Social Services and Well-being (Wales) Act 20148, or”.
Charlie Elphicke
David Evennett
Two of the Lords Commissioners of Her Majesty’s Treasury

The Secretary of State for Work and Pensions concurs

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

Baroness Altmann
Minister of State
Department for Work and Pensions
EXPLANATORY NOTE
(This note is not part of the Regulations)

These Regulations amend the Social Security Benefit (Computation of Earnings) Regulations 1996 (S.I. 1996/2745).

The 1996 Regulations make provision for the calculation or estimation of income so as to enable the Secretary of State to determine the amount of benefit a claimant should be awarded. Broadly, the income of a self-employed claimant is calculated by determining the claimant’s net profit over a representative period and then deducting (amongst other liabilities) an amount in respect of income tax, based on the basic rate of tax applicable to that period.

Regulations 2(2) to (4) of these Regulations amend the provisions relating to calculation or estimation of income in consequence of the power of the Scottish Parliament to set a Scottish rate of income tax provided for in Part 4A of the Scotland Act 1998 (c. 46). The power is first being exercised for the tax year 2016-2017.

Paragraph (2) introduces definitions of a “Scottish taxpayer” and the “Scottish basic rate” of tax and paragraphs (3) and (4) add references to the “Scottish basic rate” of tax to the existing references to the basic rate of tax and update references to “personal reliefs” so as to refer to the relevant provisions of the Income Tax Act 2007 (c. 3).

Regulation 2(3)(a) omits regulation 4(2) of the 1996 Regulations, which is no longer relevant.

Paragraph (5) amends paragraph 6 of Schedule 1 to the 1996 Regulations, which enables a payment to be disregarded in the calculation of earnings if it is made by a local authority in relation to a child being looked after by the authority, so as to include a reference to the provisions under which such payments are made in the Social Services and Well-being (Wales) Act 2014 (anaw 4).

An impact assessment has not been produced for this instrument as it has no impact on business or civil society organisations.