Citation, commencement, interpretation and extent1

1

This Order may be cited as the Social Security (Reduced Rates of Class 1 Contributions, Rebates and Minimum Contributions) Order 2006 and shall come into force on 6th April 2007.

2

In this Order—

  • “the 1993 Act” means the Pension Schemes Act 1993;

  • “the Northern Ireland Act” means the Pension Schemes (Northern Ireland) Act 1993;

  • “the low earnings threshold”, in relation to a tax year, means the low earnings threshold for that tax year as specified in—

    1. a

      section 44A of the Social Security Contributions and Benefits Act 19927 (deemed earnings factors); or

    2. b

      in relation to Northern Ireland, section 44A(5) of the Social Security Contributions and Benefits (Northern Ireland) Act 19928 (deemed earnings factors);

  • “qualifying earnings factor”, in relation to a tax year, has the same meaning as in—

    1. a

      section 122(1) of the Social Security Contributions and Benefits Act 1992 (interpretation); or

    2. b

      in relation to Northern Ireland, section 121(1) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (interpretation);

  • “the upper earnings threshold” means 3LET minus 2QEF, where—

    1. a

      3LET means the amount produced by multiplying the low earnings threshold by 3; and

    2. b

      2QEF means the amount produced by doubling the qualifying earnings factor and rounding the resulting figure to the nearest whole £100 (taking any amount of £50 as nearest to the previous whole £100);

  • “relevant tax year” means any of the following tax years—

    1. a

      2007-2008;

    2. b

      2008-2009;

    3. c

      2009-2010;

    4. d

      2010-2011;

    5. e

      2011-2012.

3

These provisions of this Order extend to England and Wales and Scotland—

a

articles 2 to 4;

b

this article, and the Schedules, so far as they relate to articles 2 to 4.

4

These provisions of this Order extend to Northern Ireland—

a

articles 5 to 7;

b

this article, and the Schedules, so far as they relate to articles 5 to 7.

Alteration of reduced rates of secondary Class 1 contributions for salary related contracted-out schemes2

In section 41(1B) of the 1993 Act (reduced rates of secondary Class 1 contributions in contracted-out employment) for “3.5 per cent” substitute “3.7 per cent”.

Reduced rates of Class 1 contributions and rebates for money purchase contracted-out schemes3

1

This article applies for the purposes of section 42A of the 1993 Act (reduced rates of Class 1 contributions, and rebates).

2

For the purposes of section 42A(2) of the 1993 Act (reduction of primary Class 1 contributions), the appropriate flat-rate percentage for each of the relevant tax years is 1.6 per cent.

3

For the purposes of section 42A(2A) of the 1993 Act (reduction of secondary Class 1 contributions), the appropriate flat-rate percentage for each of the relevant tax years is 1.4 per cent.

4

For the purposes of section 42A(3) of the 1993 Act (appropriate age-related percentage), the appropriate age-related percentage in respect of an earner for a relevant tax year is the percentage given in the table in Schedule 1 by reference to—

a

that tax year, and

b

the age of the earner on the day immediately before the start of that tax year.

Appropriate age-related percentages for appropriate personal pension schemes4

1

This article applies for the purposes of section 45(1) of the 1993 Act (amount of minimum contributions).

2

For a relevant tax year, the appropriate age-related percentage in respect of earnings of an earner is determined in accordance with paragraph (3), (4) or (5).

3

If the earnings do not exceed the low earnings threshold, the appropriate age-related percentage is the column B percentage.

4

If the earnings exceed the low earnings threshold, but do not exceed the upper earnings threshold, then—

a

in respect of the part of the earnings that does not exceed the low earnings threshold, the appropriate age-related percentage is the column B percentage;

b

in respect of the part of the earnings that exceeds the low earnings threshold, the appropriate age-related percentage is the column C percentage.

5

If the earnings exceed the low earnings threshold and the upper earnings threshold, then—

a

in respect of the part of the earnings that does not exceed the low earnings threshold, the appropriate age-related percentage is the column B percentage;

b

in respect of the part of the earnings that exceeds the low earnings threshold but does not exceed the upper earnings threshold, the appropriate age-related percentage is the column C percentage; and

c

in respect of the part of the earnings that exceeds the upper earnings threshold, the appropriate age-related percentage is the column D percentage.

6

For a relevant tax year, in respect of earnings of an earner—

a

the column B percentage is the percentage given in column B of the appropriate table by reference to the age of the earner on the day immediately before the start of that tax year;

b

the column C percentage is the percentage given in column C of the appropriate table by reference to the age of the earner on the day immediately before the start of that tax year;

c

the column D percentage is the percentage given in column D of the appropriate table by reference to the age of the earner on the day immediately before the start of that tax year.

7

The appropriate table is the table in—

a

Schedule 2, if the relevant tax year is 2007-2008;

b

Schedule 3, if the relevant tax year is 2008-2009;

c

Schedule 4, if the relevant tax year is 2009-2010;

d

Schedule 5, if the relevant tax year is 2010-2011;

e

Schedule 6, if the relevant tax year is 2011-2012.

Alteration of reduced rates of secondary Class 1 contributions for salary related contracted-out schemes5

In section 37(1B) of the Northern Ireland Act9 (reduced rates of secondary Class 1 contributions) for “3.5 per cent” substitute “3.7 per cent”.

Reduced rates of Class 1 contributions and rebates for money purchase contracted-out schemes6

1

This article applies for the purposes of section 38A of the Northern Ireland Act10 (reduced rates of Class 1 contributions, and rebates in contracted-out employment).

2

For the purposes of section 38A(2) of the Northern Ireland Act (reduction of primary Class 1 contributions), the appropriate flat-rate percentage for each of the relevant tax years is 1.6 per cent.

3

For the purposes of section 38A(2A) of the Northern Ireland Act (reduction of secondary Class 1 contributions), the appropriate flat-rate percentage for each of the relevant tax years is 1.4 per cent.

4

For the purposes of section 38A(3) of the Northern Ireland Act (appropriate age-related percentage), the appropriate age-related percentage in respect of an earner for a relevant tax year is the percentage given in the table in Schedule 1 by reference to—

a

that tax year, and

b

the age of the earner on the day immediately before the start of that tax year.

Appropriate age-related percentages for appropriate personal pension schemes7

1

This article applies for the purposes of section 41(1) of the Northern Ireland Act11 (amount of minimum contributions).

2

For a relevant tax year, the appropriate age-related percentage in respect of earnings of an earner is determined in accordance with paragraph (3), (4) or (5).

3

If the earnings do not exceed the low earnings threshold, the appropriate age-related percentage is the column B percentage;

4

If the earnings exceed the low earnings threshold, but do not exceed the upper earnings threshold, then—

a

in respect of the part of the earnings that does not exceed the low earnings threshold, the appropriate age-related percentage is the column B percentage;

b

in respect of the part of the earnings that exceeds the low earnings threshold, the appropriate age-related percentage is the column C percentage.

5

If the earnings exceed the low earnings threshold and the upper earnings threshold, then—

a

in respect of the part of the earnings that does not exceed the low earnings threshold, the appropriate age-related percentage is the column B percentage;

b

in respect of the part of the earnings that exceeds the low earnings threshold but does not exceed the upper earnings threshold, the appropriate age-related percentage is the column C percentage; and

c

in respect of the part of the earnings that exceeds the upper earnings threshold, the appropriate age-related percentage is the column D percentage.

6

For a relevant tax year, in respect of earnings of an earner—

a

the column B percentage is the percentage given in column B of the appropriate table by reference to the age of the earner on the day immediately before the start of that tax year;

b

the column C percentage is the percentage given in column C of the appropriate table by reference to the age of the earner on the day immediately before the start of that tax year;

c

the column D percentage is the percentage given in column D of the appropriate table by reference to the age of the earner on the day immediately before the start of that tax year.

7

The appropriate table is the table in—

a

Schedule 2, if the relevant tax year is 2007-2008;

b

Schedule 3, if the relevant tax year is 2008-2009;

c

Schedule 4, if the relevant tax year is 2009-2010;

d

Schedule 5, if the relevant tax year is 2010-2011;

e

Schedule 6, if the relevant tax year is 2011-2012.

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

Stephen C. TimmsMinister of State,Department for Work and Pensions