Commentary on provisions of Bill
11 The Bill has three 3 substantive clauses which all apply to a tax year that begins after the day on which the Bill comes into force, but before the date of the first parliamentary general election after that day. Clause 3 applies to a tax year in which income tax is charged.
Clause 1: Main and additional primary percentage
12 Clause 1 provides that the main primary percentage shall not exceed 12 per cent and, that the additional primary percentage, shall not exceed 2 per cent. These are the current rates as set out in the SSCBA and SSCB(NI)A.
Clause 2: Secondary percentage
13 Clause 2 provides that the secondary percentage payable by employers shall not exceed 13.8 per cent. This is the current rate as set out in the SSCBA and SSCB(NI)A. By fixing the secondary percentage it also fixes the Class 1A and 1B contributions.
Clause 3: Upper Earnings Limit
14 Clause 3 links the UEL to the higher rate income tax threshold by setting out that it shall not exceed the weekly equivalent of the proposed higher rate threshold for that tax year. The "proposed higher rate threshold" is defined in subsection (3) as the sum of the basic rate limit for income tax for the tax year and the personal allowance for income tax for the tax year in the pre-budget proposals.
15 "Pre-budget proposals" is defined as meaning the government's fiscal proposals for a tax year, which are contained in a command paper laid before Parliament by the Chancellor of the Exchequer. It is intended that this will be the Chancellor's autumn statement.
As the UEL is a weekly figure the higher rate threshold for income tax has to be converted into a weekly amount, this is done by dividing the threshold by 52 and rounding up or down to the nearest pound.