Social Security Contributions and Benefits Act 1992

Class 4 contributions

15 Class 4 contributions recoverable under the Income Tax Acts

(1) Class 4 contributions shall be payable for any tax year in respect of all annual profits or gains which—

(a) are immediately derived from the carrying on or exercise of one or more trades, professions or vocations, and

(b) are profits or gains chargeable to income tax under Case I or Case II of Schedule D for the year of assessment corresponding to that tax year.

(2) Class 4 contributions in respect of profits or gains shall be payable—

(a) in the same manner as any income tax which is, or would be, chargeable in respect of those profits or gains (whether or not income tax in fact falls to be paid), and

(b) by the person on whom the income tax is (or would be) charged,

in accordance with assessments made from time to time under the Income Tax Acts.

(3) A Class 4 contribution for any tax year shall be an amount equal to 6.3 per cent. of so much of the profits or gains referred to in subsection (1) above (as computed in accordance with Schedule 2 to this Act) as exceeds £6,120 and does not exceed £21,060.

(4) The reference in subsection (1) above to profits or gains chargeable to income tax under Case I or Case II of Schedule D shall be taken to include a reference to profits or gains consisting of a payment of enterprise allowance chargeable to income tax under Case VI of Schedule D by virtue of section 127(2) of the [1988 c. 1.] Income and Corporation Taxes Act 1988.

(5) For the purposes of this section the year of assessment which corresponds to a tax year is the year of assessment (within the meaning of the Tax Acts) which consists of the same period as that tax year.

16 Application of Income Tax Acts and destination of Class 4 contributions

(1) All the provisions of the Income Tax Acts, including in particular—

(a) provisions as to assessment, collection, repayment and recovery, and

(b) the provisions of Part X of the [1970 c. 9.] Taxes Management Act 1970 (penalties),

shall, with the necessary modifications, apply in relation to Class 4 contributions under this Act and the Northern Ireland Contributions and Benefits Act as if those contributions were income tax chargeable under Case I or Case II of Schedule D.

(2) Subsection (1) above is subject to any provision made by or under—

(a) sections 17(3) and (4) and 18 below;

(b) sections 17(3) and (4) and 18 of the Northern Ireland Contributions and Benefits Act; and

(c) Schedule 2 to this Act.

(3) Schedule 2 to this Act has effect for the application or modification, in relation to Class 4 contributions under this Act and the Northern Ireland Contributions and Benefits Act, of certain provisions of the Income Tax Acts, and the exclusion of other provisions, and generally with respect to the contributions.

(4) The Inland Revenue shall, at such times and in such manner as the Treasury may direct, account to the Secretary of State for, and pay to him—

(a) the sums estimated by the Inland Revenue (in the manner so directed) to have been collected by them as Class 4 contributions under section 15 above and section 15 of the Northern Ireland Contributions and Benefits Act; and

(b) so much of any interest recovered by the Inland Revenue by virtue of paragraph 6 of Schedule 2 to this Act as remains after the deduction by them of any administrative costs attributable to its recovery.

(5) So much of any money received by the Secretary of State under subsection (4) above as is estimated by him, in accordance with any directions of the Treasury, to represent Class 4 contributions collected, or interest in respect of such contributions recovered, from persons in Northern Ireland shall be paid over by him to the Northern Ireland Department.

17 Exceptions, deferment and incidental matters relating to Class 4 contributions

(1) The Secretary of State may by regulations made with the concurrence of the Inland Revenue provide—

(a) for excepting persons from liability to pay Class 4 contributions in accordance with sections 15 and 16(1) to (3) above; or

(b) for deferring any person’s liability,

and may certify from time to time to the Inland Revenue the persons who are excepted from liability, or whose liability is to be deferred, and who accordingly are not required (except in accordance with the regulations) to be assessed for contributions.

(2) Exception from liability, or deferment, under subsection (1) above may, in particular, be by reference—

(a) to a person otherwise liable for contributions being under a prescribed age at the beginning of a tax year;

(b) to a person having attained pensionable age;

(c) to a person being in receipt of earnings in respect of which primary Class 1 contributions are, or may be, payable; or

(d) to a person not satisfying prescribed conditions as to residence or presence in the United Kingdom.

(3) Regulations may provide for any incidental matters arising out of the payment of any Class 4 contributions recovered by the Inland Revenue, including in particular the return, in whole or in part, of such contributions in cases where—

(a) payment has been made in error; or

(b) repayment ought for any other reason to be made.

(4) Regulations may provide for any matters arising out of the deferment of liability for Class 4 contributions under subsection (1) above, including in particular provision for the amount of a person’s profits or gains (as computed in accordance with Schedule 2 to this Act) to be certified by the Inland Revenue to the Secretary of State and the person liable.

(5) No such certificate as is referred to in subsection (4) above shall relate to a person’s profits or gains so far as they exceed the higher of the two money sums for the time being specified in section 15(3) above.

(6) Any regulations under subsection (3) or (4) above must be made with the concurrence of the Inland Revenue.

18 Class 4 contributions recoverable under regulations

(1) Provision may be made by regulations so that where—

(a) an earner, in respect of any one or more employments of his, is treated by regulations under section 2(2)(b) above as being self-employed; and

(b) in any tax year he has earnings from any such employment (one or more) which fall within paragraph (b)(i) of subsection (3) of section 11 above but is not liable for a higher weekly rate of Class 2 contributions by virtue of regulations under that subsection; and

(c) the total of those earnings exceeds £6,120,

he is to be liable, in respect of those earnings, to pay a Class 4 contribution of an amount equal to 6.3 per cent. of so much of the total as exceeds £6,120 and does not exceed £21,060.

(2) It shall be for the Secretary of State, and not the Inland Revenue, to recover Class 4 contributions payable by virtue of regulations under this section and generally to be responsible for the relevant administration; and, in relation to contributions so payable, regulations may—

(a) apply any of the provisions of Schedule 1 to this Act (except a provision conferring power to make regulations); and

(b) make any such provision as may be made by regulations under that Schedule, except paragraph 6.