The Social Security (Contributions) (Amendment) Regulations 2003

Explanatory Note

(This note is not part of the Regulations)

These Regulations amend the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004: “the principal Regulations”) to reflect the changes made to the structure of the contributory system by the National Insurance Contributions Act 2002 (c. 19: “the Contributions Act”). That Act imposes an additional 1 per cent. charge in respect of national insurance contributions.

Regulation 1 provides for the citation, commencement, effect and interpretation of the Regulations.

Regulation 2 introduces the changes made to the principal Regulations.

Regulation 3 amends the definition, in regulation 1(2) of the principal Regulations, of “non-contracted-out rate” consequent on the introduction of the main and additional primary percentages by the Contributions Act.

Regulation 4 amends regulation 9 of the principal Regulations to provide the rules about earnings periods for statutory paternity pay and statutory adoption pay, which are introduced in Great Britain under Parts 12ZA and 12ZB of the Social Security Contributions and Benefits Act 1992 (c. 4) inserted by the Employment Act 2002 (c. 22) and, in Northern Ireland, under Parts XIIZA and XIIZB of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7) inserted by the Employment (Northern Ireland) Order 2002 (S.I. 2002/2836 (N.I. 2)).

Regulation 5 amends regulation 10 of the principal Regulations to specify the levels of the lower and upper earnings limits for primary Class 1 contributions for the tax year beginning on 6th April 2003. The primary and secondary thresholds remain unchanged from those for the tax year beginning 6th April 2002.

Regulation 6 substitutes a new regulation 21 of the principal Regulations. The new regulation provides for the computation of annual maxima for contributions in the case of those with more than one employment.

Regulation 7 amends regulation 49(1) of the principal Regulations consequent on the restructuring of primary Class 1 contributions.

Regulation 8 substitutes a new regulation 84 of the principal Regulations dealing with the circumstances in which and extent to which the Commissioners of Inland Revenue (“the Board”) may make an arrangement with the primary contributor so that he is to account directly to the Board in respect of primary contributions.

Regulation 9 omits regulation 85 of the principal Regulations.

Regulation 10 amends regulation 90 of the principal Regulations so as to widen the Board’s discretion to permit deferment of contributions.

Regulation 11 amends regulation 94 of the principal Regulations to provide a wider exception from Class 4 liability where the earnings in question, although chargeable to income tax under Schedule D, are derived from employed earner’s employment.

Regulation 12 amends regulation 95 of the principal Regulations to make it clear that the Board may specify both the extent to which, and the period for which, liability for Class 4 contributions may be deferred.

Regulation 13 amends regulation 99 as a consequence of the fact that it is now possible for the Board to authorise deferment of part of the liability for Class 4 contributions payable. It also amends paragraph (3) of that regulation consequent on changes made to section 17 of the Social Security Contributions and Benefits Act 1992 by the Contributions Act.

Regulation 14 substitutes a new regulation 100 of the principal Regulations providing for the computation of an annual maximum of Class 4 contributions and reflecting the new structure of Class 4 contributions.

Regulation 15 amends regulation 103 of the principal Regulations (Class 4 liability of earners treated as self-employed) to reflect the new structure of Class 4 contributions.

Regulation 16 amends Schedule 4 to the principal Regulations by altering the information which an employer is required to record on a deductions working sheet under paragraph 7, on a deduction certificate under paragraph 9 and on an end of year return under paragraph 22, to require information about payments of statutory paternity pay and statutory adoption pay and information needed to ensure that the additional 1 per cent. national insurance charge is properly applied. It substitutes a new paragraph 11(4) amending the basis upon which an employer is entitled to elect to account to the Board quarterly in respect of his liability for contributions. Finally it amends paragraph 26 so as to make it clear that, if an employer’s records are being inspected by an officer of the Board and they are maintained by computer, the employer must provide the officer with all facilities necessary to enable him to obtain the information contained in those records.

These Regulations do not in themselves impose any new costs on business. A regulatory impact assessment in respect of the effects on business of the National Insurance Contributions Act 2002 was placed in the libraries of both Houses of Parliament, and a copy is accessible on the Inland Revenue’s website (www.inlandrevenue.gov.uk), and one in respect of the Employment Act 2002 (introducing statutory paternity pay and statutory adoption pay) is accessible on the Department for Trade and Industry’s website (www.dti.gov.uk/er/employ/index.htm#Impact).