The Social Security (Contributions) (Re-rating) Order 2009

Made10th March 2009

Coming into force6th April 2009

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 sections 129 and 165(11A) of the Social Security Administration (Northern Ireland) Act 1992 (“the Northern Ireland Administration Act”)2 and now exercisable by them3.

This Order is made as a result of the Treasury carrying out in the tax year 2008-09 a review of the general level of earnings in Great Britain in accordance with section 141(1) and (2) of the Administration Act4.

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 19925 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.

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 Act6 and section 166(10A) of the Northern Ireland Administration Act7 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 2009 and shall come into force on 6th April 2009.

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 19928.

Rate of and small earnings exception from Class 2 contributions2

In both section 11 of the Act9 and section 11 of the Northern Ireland Act10 (Class 2 contributions)—

a

in subsection (1) for “£2.30” substitute “£2.40”; and

b

in subsection (4) (small earnings exception) for “£4,825” substitute “£5,075”.

Amount of Class 3 contributions3

In both section 13(1) of the Act11 and section 13(1) of the Northern Ireland Act (amount of Class 3 contributions)12 for “£8.10” substitute “£12.05”.

Lower and upper limits for Class 4 contributions4

In each of sections 15(3), 18(1) and 18(1A) of the Act13 and sections 15(3), 18(1) and 18(1A) of the Northern Ireland Act14 (Class 4 contributions recoverable under the Income Tax Acts and under regulations)—

a

for “£5,435” (lower limit) in each place where it appears, substitute “£5,715”; and

b

for “£40,040” (upper limit) in each place where it appears, substitute “£43,875”.

Frank RoyTony CunninghamTwo of the Lords Commissioners of Her Majesty’s Treasury10th March 2009

EXPLANATORY NOTE

(This note is not part of the Order)

This Order 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 £2.30 to £2.40 and from £8.10 to £12.05. 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 £4,825 to £5,075 (Articles 2 and 3).

The Order also increases, from £5,435 to £5,715 and from £40,040 to £43,875 respectively, the lower and upper limits of profits specified in sections 15 and 18, between 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 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 sections 142(1) of the Social Security Administration Act 1992, a copy of the report by the Government Actuary (Cm. 7537), giving his opinion on the likely effect on the National Insurance Fund of the making of the Order, insofar as it amends 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 full impact assessment has not been produced for this instrument as no impact on the private or voluntary sectors is foreseen.