The Social Security (Contributions) Regulations 2001

PART 3 U.K. CLASS 1A CONTRIBUTIONS

Interpretation for the purposes of this Part U.K.

32.  In this Part any reference to Schedule 6 to the Taxes Act (taxation of directors and others in respect of cars) F1 means a reference to that Schedule as applied by section 10 of the Act F2 .

Textual Amendments

F1 Schedule 6 was substituted by paragraph 5 of Schedule 3 to the Finance Act 1993.

F2 Section 10 was substituted by section 74(2) of the Child Support, Pensions and Social Security Act 2000 (c. 19).

Exception from liability to pay Class 1A contributions in respect of cars made available to members of an employed earner’s family or household in certain circumstances U.K.

33.—(1) Where in any year a car made available for private use to an employed earner (“A”) by reason of his own employment as an employed earner is, for the purposes of Chapter II of Part V of the Taxes Act, (persons in employment with total emoluments of not less than £8,500 per year), deemed in pursuance of section 168(6)(b) of that Act to be made available to him by reason of another employed earner’s (“B”) employment under the employer of A by virtue of A being a member of the family or household (within the meaning of section 168(4) of that Act) of B, the person who, but for this regulation would be liable to pay Class 1A contributions for that year in respect of the earners and car in question shall, in the further circumstances specified in paragraph (2) or (3), be excepted from liability to pay any Class 1A contribution arising in respect of B and the car.

(2) For the purposes of paragraph (1), the further circumstances are that a Class 1A contribution is payable for that year in respect of the car and A.

(3) For the purposes of paragraph (1), the further circumstances are that no Class 1A contribution is payable for that year in respect of the car and A because A is not chargeable to income tax as mentioned in section 10(1) of the Act by reason that his employment as an employed earner under the employer concerned is not employment to which Chapter II of Part V of the Taxes Act applies and either—

(a) other employed earners under that employer—

(i) who are in similar employments to A, and

(ii) who are not relatives of any other employed earner under that employer, whose employment falls within section 167(1) of the Taxes Act (employments to which Chapter II to Part V of that Act applies),

have, in that year, cars equivalent to that made available to A, made available to them on the same terms as that made available to A by reason of their own employments; or

(b) the making available for private use to a person by reason of his employment of a car equivalent to that made available to A is in accordance with normal commercial practice for employment of the type concerned.

(4) For the purposes of paragraph (3), a person is a relative of another if he is—

(a) the spouse of that other;

(b) a parent or remoter forebear, child or remoter issue, or brother or sister of that other or of that other’s spouse; or

(c) the spouse of a person falling within sub-paragraph (b).

Class 1A contributions payable where two or more cars are made available concurrently U.K.

34.—(1) This regulation applies where the amount of any Class 1A contribution payable for any year does not reflect a reduction in the cash equivalent of the benefit of the car as provided for by paragraph 2 of Schedule 6 to the Taxes Act, because of the application of paragraph 4 of that Schedule (modified reduction in cash equivalent where two or more cars are made available concurrently).

(2) Except in the circumstances specified in paragraph (3), where paragraph (1) applies the amount of any Class 1A contribution payable for that year by the person liable to pay such contribution shall be equal to the amount which would have been payable if paragraph 4 had been omitted from Schedule 6 to the Taxes Act.

(3) For the purposes of paragraph (2), the circumstances are that two or more cars are made available for private use by reason of—

(a) any one employed earner’s employment;

(b) two or more employed earner’s employments under the same employer; or

(c) two or more employed earner’s employments under different employers who are associated.

(4) For the purposes of this regulation—

(a) two or more employers shall be treated as associated if—

(i) they are carrying on business in association, or

(ii) one has control of the other or others, or any person has control of both or all of them;

(b) references to an employer (“the first employer”) having control of another employer (“the second employer”) shall be construed as references to the first employer having control of the second employer either by himself or in conjunction with any person having control over the first employer;

(c) “control” means, except in relation to an employer which is a partnership, power to secure that the affairs of the employer are conducted in accordance with the wishes of the person concerned being, in relation to an employer which is a body corporate, power exercisable—

(i) by means of the holding of shares or the possession of voting power in or in relation to that or any other employer, or

(ii) by virtue of any powers conferred by the articles of association or other document regulating that or any other employer;

(d) “control” means, in relation to any employer which is a partnership, having the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership.

Reduction of certain Class 1A contributions in the case of a car provided or made available by reason of two or more employments or to two or more employed earners U.K.

35.—(1) This regulation applies if—

(a) a car is provided or made available to an employed earner by reason of two or more employed earner’s employments, whether under the same employer or different employers; or

(b) a car is provided or made available to two or more employed earners concurrently by reason of their respective employed earner’s employments under the same employer,

and all of those employed earner’s employments are employments to which Chapter II of Part V of the Taxes Act applies.

(2) If this regulation applies—

(a) the amount of any Class 1A contribution which would be payable for the year by the person liable to pay such contribution shall, in the circumstances described in paragraph (3)(a), be so reduced as to equal the amount which would have been payable on the assumption mentioned in paragraph (3)(a);

(b) the amount of any Class 1A contribution which would be payable for the year by the person liable to pay such contribution shall, in the circumstances described in paragraph (3)(b), be so reduced as to equal the amount which would have been payable on the assumption mentioned in paragraph (3)(b).

(3) For the purposes of—

(a) paragraph (2)(a), the circumstances are that the aggregate use of the car for business travel in all the employed earner’s employments concerned is not less than 18,000 miles (or such lower figure as would be applicable by virtue of paragraph 3(a) of Schedule 6 to the Taxes Act (reduction for periods when the car was unavailable for use) by reason of the car being unavailable within the meaning of paragraph 9 of that Schedule) and the assumption is that in each of those employments the car was used for business travel for at least 18,000 miles (or such lower figure as would be applicable by virtue of paragraph 3(a) of that Schedule);

(b) paragraph (2)(b), the circumstances are that the aggregate use of the car for business travel in all the employed earner’s employments concerned is more than 2,500 miles but less than 18,000 miles (or such lower figures as would be applicable by virtue of paragraph 3 of Schedule 6 to the Taxes Act (reduction for periods of unavailability) by reason of the car being unavailable within the meaning of paragraph 9 of that Schedule) and the assumption is that in each of those employments the car was used for business travel for more than 2,500 miles but less than 18,000 miles (or such lower figures as would be applicable by virtue of paragraph 3 of that Schedule).

Reduction of certain Class 1A contributions on account of the number of employments in the cases of something provided or made available by reason of two or more employments and of something provided or made available to two or more employed earners U.K.

36.—(1) This regulation applies if something is provided or made available—

(a) an employed earner by reason of two or more employed earner’s employments, whether under the same employer or different employers; or

(b) two or more employed earners concurrently by reason of their respective employed earner’s employments under the same employer,

and all of those employed earner’s employments are employments to which Chapter II of Part V of the Taxes Act applies.

(2) If this regulation applies the amount of any Class 1A contribution payable for the year by the person liable to pay such contribution shall be reduced (or, where regulation 35 applies, shall be further reduced) by deducting from that amount an amount equal to the fraction—

of the amount which would be payable but for this regulation.

Here X is the total number of employments in respect of which the thing is provided or made available.

Reduction of certain Class 1A contributions in respect of cars made available to disabled employed earners U.K.

37.—(1) This paragraph applies if a car is made available by reason of his employment and on account of his disability for purposes of, or purposes which include, assisting, on account of his disability, his travelling between his home and his place of employment.

(2) Where paragraph (1) applies, the amount of any Class 1A contribution which would be payable for the year by the person liable to pay such contribution shall in the circumstance described in paragraph (3) or (4), be reduced so as to equal the amount which would have been payable if the employed earner’s travelling between his home and place of employment were business travel.

(3) The circumstance is that treating the private use of the car by the employed earner in travelling between his home and his place of employment as business travel would increase the use of the employed earner’s business travel to an amount of not less than 18,000 miles (or such lesser figure as is applicable by virtue of paragraph 3(a) of Schedule 6 to the Taxes Act (reductions for periods when car unavailable for use)).

(4) The circumstance is that treating the private use of the car by the employed earner in travelling between his home and his place of employment as business travel would increase the use of the car for the employed earner’s business travel to an amount of not less than 2,500 miles but less than 18,000 miles (or such lesser figure as is applicable by virtue of paragraph 3(a) and (b) of Schedule 6 to the Taxes Act.

(5) In this regulation and regulation 38 “disabled”, in relation to a person, means that the person suffers from some permanent handicap resulting from an illness, injury or congenital condition, and “disability” shall be construed accordingly.

Exception from liability to pay Class 1 contributions in respect of cars made available to disabled employed earners only for business and home to work travel U.K.

38.—(1) If the conditions mentioned in paragraphs (2) to (5) are satisfied, the person who would otherwise be liable to pay the Class 1A contribution for that year in respect of the employer earner and the car mentioned in those paragraphs shall be excepted from that liability.

(2) The first condition is that the car is made available to an earner who is disabled.

(3) The second condition is that the car is made available to the earner by reason of his employment.

(4) The third condition is that the car is made available account of the earner’s disability for the purposes of, or for purposes which include assisting, the earner’s travelling between the earner’s home and place of employment.

(5) The fourth condition is that the terms on which the car is made available to the earner prohibit private use other than—

(a) by the earner to whom it is made available; and

(b) in travelling between the earner’s home and place of employment.

(6) The fifth condition is that no prohibited private use of the car has been made in the year.

Calculation of Class 1A contributions U.K.

39.  Where a person is liable to pay a Class 1A contribution in accordance with section 10 of the Act (Class 1A contributions: benefits in kind, etc) the amount of that contribution shall be calculated to the nearest penny, and any amount of a halfpenny or less shall be disregarded.

Prescribed [F3 general earnings] in respect of which Class 1A contributions not payable U.K.

40.—(1) Class 1A contributions shall not be payable in respect of the [F4 general earnings] prescribed by paragraphs (2) to (7).

(2) The [F5 general earnings] prescribed by this paragraph are [F6 those] which are excluded from the calculation of a person’s earnings in respect of any employed earner’s employment by virtue of the following provisions of Schedule 3—

[F7 (za) in Part V, paragraph 6A;]

(a) in Part VI, paragraphs 4 to 7;

(b) in Part VIII, paragraphs 4, 5 and 13;

(c) in Part IX, paragraphs 2 to 7; and

(d) in Part X, paragraphs 5, [F8 9, 11 to 13 and 15].

(3) The [F5 general earnings] prescribed by this paragraph are [F6 those] which are payments which are not excluded from the calculation of a person’s earnings in respect of any employed earner’s employment by virtue of paragraph 1 of Part II of Schedule 3 (payments in kind), but which are so excluded by virtue of paragraph 3 of Part VIII of Schedule 3 (qualifying travelling expenses) or paragraph 9 of that Part (specific and distinct expenses).

(4) The [F5 general earnings] prescribed by this paragraph are [F6 those] which—

(a) are excluded from the calculation of a person’s earnings in respect of any employed earner’s employment by virtue of paragraph 2(2)(b) of Part VIII of Schedule 3 (relocation expenses where the relevant change occurred before 6th April 1998); and

[F9 (b) are not removal expenses to which section 271 of ITEPA 2003 applies.]

(5) The [F5 general earnings] prescribed by this paragraph are [F6 those] which consist in the provision, or are provided in connection with all or part of the costs and expenses, of child care (but not school fees) incurred by an employed earner in respect of a child not exceeding the age of 16 years for whom he has parental responsibility.

(6) The [F5 general earnings] prescribed by this paragraph are [F6 those] by way of any benefit pursuant to—

F10 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) a pilots’ benefit fund under section 607 of the Taxes Act F11 ;

(c) a fund to which section 608 of the Taxes Act (superannuation funds approved before 6th April 1980) applies.

[F12 (6A) The general earnings prescribed by this paragraph are those by way of any benefit—

(a) pursuant to a retirement benefits scheme which is not “non-approved” for the purpose of section 387(2) of ITEPA 2003; or

(b) to which section 386 of ITEPA 2003 (charge on payments to non-approved retirement benefits schemes) does not apply by virtue of section 390 of that Act.]

(7) [F13 The general earnings prescribed by this paragraph are so much of any general earnings as are not charged to income tax as employment income by virtue of;] any of the following extra-statutory concessions published by the Board as at 1st September 2000—

F14 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F15 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) A11 (residence in the United Kingdom: year of commencement or cessation of residence);

F16 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e) A37 (tax treatment of directors’ fees received by partnerships and other companies);

(f) A56 (benefits in kind: tax treatment of accommodation in Scotland provided for employees);

F17 (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F17 (h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F17 (i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F17 (j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F17 (k) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F17 (l) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F17 (m) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F17 (n) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F17 (o) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(p) A91 (living accommodation provided by reason of employment);

(q) A97 (Jobmatch programme).

Sub-paragraphs (b) and (q) do not apply to Northern Ireland and sub-paragraph (f) applies only to Scotland.

(8) In this regulation—

• “child care” includes—

  (a)

  F18 care provided in accordance with the provisions of Part X of the Children Act 1989 (child-minding and day care for young children);

  (b)

  in the case of a child aged 8 or over, care provided by a child minder;

  (c)

  in the case of a child under the age of 8, care provided by a child minder where that care does not exceed, in total, two hours in any day;

  (d)

  care provided by a relative or a nanny;

  (e)

  care provided during out-of-school hours and during school holidays;

  (f)

  full-time and part-time care;

• F19 ...

• “nanny” and “relative” have the meanings respectively given to them in sections 71(13) and 105(1) of the Children Act 1989.

(9) In its application to Northern Ireland, paragraph (8) has effect with the substitution—

(a) in sub-paragraph (b) of “ aged 12 or over ” for “aged 8 or over”; and

(b) in sub-paragraph (c) of “ the age of 12 ” for the “the age of 8”.

Textual Amendments

F3 Words in reg. 40 heading substituted (1.9.2003) by The Social Security (Contributions) (Amendment No. 5) Regulations 2003 (S.I. 2003/2085), regs. 1, 6(2)

F4 Words in reg. 40(1) substituted (1.9.2003) by The Social Security (Contributions) (Amendment No. 5) Regulations 2003 (S.I. 2003/2085), regs. 1, 6(2)

F5 Words in reg. 40(2)-(6) substituted (1.9.2003) by The Social Security (Contributions) (Amendment No. 5) Regulations 2003 (S.I. 2003/2085), regs. 1, 6(3)(a)

F6 Word in reg. 40(2)-(6) substituted (1.9.2003) by The Social Security (Contributions) (Amendment No. 5) Regulations 2003 (S.I. 2003/2085), regs. 1, 6(3)(b)

F7 Reg. 40(2)(za) inserted (26.7.2001) by The Social Security (Contributions) (Amendment No. 5) Regulations 2001 (S.I. 2001/2412), regs. 1, 3(2)(a)

F8 Words in reg. 40(2)(d) substituted (26.7.2001) by The Social Security (Contributions) (Amendment No. 5) Regulations 2001 (S.I. 2001/2412), regs. 1, 3(2)(b)

F9 Reg. 40(4)(b) substituted (1.9.2003) by The Social Security (Contributions) (Amendment No. 5) Regulations 2003 (S.I. 2003/2085), regs. 1, 6(4)

F10 Reg. 40(6)(a) omitted (1.9.2003) by virtue of The Social Security (Contributions) (Amendment No. 5) Regulations 2003 (S.I. 2003/2085), regs. 1, 6(5)

F11 Section 607 was amended by section 104(2) of the Finance Act 1994 (c. 9).

F12 Reg. 40(6A) inserted (1.9.2003) by The Social Security (Contributions) (Amendment No. 5) Regulations 2003 (S.I. 2003/2085), regs. 1, 6(6)

F13 Words in reg. 40(7) substituted (1.9.2003) by The Social Security (Contributions) (Amendment No. 5) Regulations 2003 (S.I. 2003/2085), regs. 1, 6(7)(a)

F14 Reg. 40(7)(a) omitted (26.7.2001) by virtue of The Social Security (Contributions) (Amendment No. 5) Regulations 2001 (S.I. 2001/2412), regs. 1, 3(3)

F15 Reg. 40(7)(b) omitted (1.9.2003) by virtue of The Social Security (Contributions) (Amendment No. 5) Regulations 2003 (S.I. 2003/2085), regs. 1, 6(7)(b)

F16 Reg. 40(7)(d) omitted (1.9.2003) by virtue of The Social Security (Contributions) (Amendment No. 5) Regulations 2003 (S.I. 2003/2085), regs. 1, 6(7)(b)

F17 Reg. 40(7)(g)-(o) omitted (1.9.2003) by virtue of The Social Security (Contributions) (Amendment No. 5) Regulations 2003 (S.I. 2003/2085), regs. 1, 6(7)(b)

F18 1989 c. 41.

F19 Words in reg. 40(8) omitted (1.9.2003) by virtue of The Social Security (Contributions) (Amendment No. 5) Regulations 2003 (S.I. 2003/2085), regs. 1, 6(8)