National Insurance Contributions Bill (HL Bill 74)

Secondary Class 1 contributions: apprentices under 25

1 Zero-rate secondary Class 1 contributions for apprentices under 25

(1) SSCBA 1992 is amended as follows.

(2) In section 9 (calculation of secondary Class 1 contributions), in subsection (1A),
5after paragraph (a) insert—

“(aa) if section 9B below (zero-rate secondary Class 1 contributions
for certain apprentices) applies to the earnings, 0%;”.

(3) In section 9A (the age-related secondary percentage), after subsection (1)
insert—

“(1A) 10But this section does not apply to those earnings so far as section 9B
below (zero-rate secondary Class 1 contributions for certain
apprentices) applies to them.”

(4) After section 9A insert—

“9B Zero-rate secondary Class 1 contributions for certain apprentices

(1) 15Where a secondary Class 1 contribution is payable as mentioned in
section 6(1)(b) above, this section applies to the earnings paid in the tax
week, in respect of the employment in question, if the earner is a
relevant apprentice in relation to that employment.

(2) An earner is a “relevant apprentice”, in relation to an employment, if
the earner—

(a) is aged under 25, and

(b) is employed, in the employment, as an apprentice.

(3) 5For the purposes of this Act a person is still to be regarded as being
liable to pay a secondary Class 1 contribution even if the amount of the
contribution is £0 because this section applies to the earnings in
question.

(4) The Treasury may by regulations provide that, in relation to relevant
10apprentices, there is to be for every tax year an upper secondary
threshold for secondary Class 1 contributions.

That threshold is to be the amount specified for that year by regulations
made by the Treasury.

(5) Subsections (4) and (5) of section 5 above (which confer power to
15prescribe an equivalent of a secondary threshold in relation to earners
paid otherwise than weekly), and subsection (6) of that section as it
applies for the purposes of those subsections, apply for the purposes of
an upper secondary threshold in relation to relevant apprentices as
they apply for the purposes of a secondary threshold.

(6) 20Subsection (7) applies if—

(a) a secondary Class 1 contribution is payable as mentioned in
section 6(1)(b) above,

(b) the earnings paid in the tax week, in respect of the employment
in question, exceed the current upper secondary threshold (or
25the prescribed equivalent) in relation to relevant apprentices,
and

(c) the earner is a relevant apprentice in relation to the
employment.

(7) This section does not apply to those earnings so far as they exceed that
30threshold (or the prescribed equivalent) (“the excess earnings”) and,
accordingly, for the purposes of section 9(1) above the relevant
percentage in respect of the excess earnings is the secondary
percentage.

(8) But the Treasury may by regulations modify the effect of subsection (7)
35in a case in which the earner falls within an age group specified in
column 1 of the table in section 9A(3) above.

(9) In subsection (2)(b) “apprentice” has such meaning as the Treasury may
prescribe.

(10) The Treasury may by regulations amend subsection (2)(a) so as to alter
40the age that an earner must be in order to be a relevant apprentice (and
regulations under this subsection may have the effect of allowing
anyone who is of an age at which secondary Class 1 contributions are
payable to be a relevant apprentice).”

(5) In section 176(1)(a) (regulations subject to affirmative procedure), after “section
459A(7);” insert—

• “section 9B(4), (8) or (10);”.

(6) SSCB(NI)A 1992 is amended as follows.

(7) In section 9 (calculation of secondary Class 1 contributions), in subsection (1A),
after paragraph (a) insert—

“(aa) if section 9B below (zero-rate secondary Class 1 contributions
for certain apprentices) applies to the earnings, 0%;”.

(8) 5In section 9A (the age-related secondary percentage), after subsection (1)
insert—

“(1A) But this section does not apply to those earnings so far as section 9B
below (zero-rate secondary Class 1 contributions for certain
apprentices) applies to them.”

(9) 10After section 9A insert—

“9B Zero-rate secondary Class 1 contributions for certain apprentices

(1) Where a secondary Class 1 contribution is payable as mentioned in
section 6(1)(b) above, this section applies to the earnings paid in the tax
week, in respect of the employment in question, if the earner is a
15relevant apprentice in relation to that employment.

(2) An earner is a “relevant apprentice”, in relation to an employment, if
the earner—

(a) is aged under 25, and

(b) is employed, in the employment, as an apprentice.

(3) 20For the purposes of this Act a person is still to be regarded as being
liable to pay a secondary Class 1 contribution even if the amount of the
contribution is £0 because this section applies to the earnings in
question.

(4) The Treasury may by regulations provide that, in relation to relevant
25apprentices, there is to be for every tax year an upper secondary
threshold for secondary Class 1 contributions.

That threshold is to be the amount specified for that year by regulations
made by the Treasury.

(5) Subsections (4) and (5) of section 5 above (which confer power to
30prescribe an equivalent of a secondary threshold in relation to earners
paid otherwise than weekly), and subsection (6) of that section as it
applies for the purposes of those subsections, apply for the purposes of
an upper secondary threshold in relation to relevant apprentices as
they apply for the purposes of a secondary threshold.

(6) 35Subsection (7) applies if—

(a) a secondary Class 1 contribution is payable as mentioned in
section 6(1)(b) above,

(b) the earnings paid in the tax week, in respect of the employment
in question, exceed the current upper secondary threshold (or
40the prescribed equivalent) in relation to relevant apprentices,
and

(c) the earner is a relevant apprentice in relation to the
employment.

(7) This section does not apply to those earnings so far as they exceed that
45threshold (or the prescribed equivalent) (“the excess earnings”) and,
accordingly, for the purposes of section 9(1) above the relevant

percentage in respect of the excess earnings is the secondary
percentage.

(8) But the Treasury may by regulations modify the effect of subsection (7)
in a case in which the earner falls within an age group specified in
5column 1 of the table in section 9A(3) above.

(9) In subsection (2)(b) “apprentice” has such meaning as the Treasury may
prescribe.

(10) The Treasury may by regulations amend subsection (2)(a) so as to alter
the age that an earner must be in order to be a relevant apprentice (and
10regulations under this subsection may have the effect of allowing
anyone who is of an age at which secondary Class 1 contributions are
payable to be a relevant apprentice).”

(10) In section 172(11A) (regulations subject to affirmative procedure), after
“9A(7),” insert “section 9B(4), (8) or (10),”.

(11) 15The amendments made by this section come into force—

(a) for the purposes of making regulations under section 9B of SSCBA 1992
or section 9B of SSCB(NI)A 1992, at the end of the period of 2 months
beginning with the day on which this Act is passed, and

(b) for remaining purposes, on 6 April 2016.

20Class 2 contributions

2 Reform of Class 2 contributions

Schedule 1 contains provision relating to Class 2 national insurance
contributions.

3 Consequential etc power

(1) 25The Treasury may by regulations make consequential, incidental or
supplementary provision in connection with the provision made in Schedule 1.

(2) Regulations under this section may modify any provision of an Act or an
instrument made under an Act.

(3) In subsection (2) “modify” includes amend, repeal or revoke.

(4) 30Section 175(3) to (5) of SSCBA 1992 (various supplementary powers) applies to
the power to make regulations conferred by this section.

(5) Regulations under this section must be made by statutory instrument.

(6) A statutory instrument containing (with or without other provision)
regulations under this section that amend or repeal a provision of an Act may
35not be made unless a draft of the instrument has been laid before, and
approved by a resolution of, each House of Parliament.

(7) A statutory instrument containing regulations under this section that does not
have to be approved in draft under subsection (6) is subject to annulment in
pursuance of a resolution of either House of Parliament.

Follower notices, accelerated payments and promoters of avoidance

4 Application of Parts 4 and 5 of FA 2014 to national insurance contributions

(1) Part 1 of Schedule 2 applies Part 4 of FA 2014 (follower notices and accelerated
payments) to Class 1, 1A, 1B and certain Class 2 contributions.

(2) 5Part 2 of that Schedule applies Part 5 of that Act (promoters of tax avoidance
schemes) to Class 1, 1A, 1B and certain Class 2 contributions.

(3) Part 3 of that Schedule applies Parts 4 and 5 of that Act to Class 4 contributions.

(4) Part 4 of that Schedule contains commencement and transitory provision.

5 Provision in consequence etc of tax-only changes to Part 4 or 5 of FA 2014

(1) 10Where a modification is made to Part 4 of FA 2014 (follower notices and
accelerated payments) or Part 5 of that Act (promoters of tax avoidance
schemes) that does not apply in relation to national insurance contributions
(“the tax-only modification”), the Treasury may by regulations—

(a) make provision for the purpose of applying the tax-only modification
15in relation to national insurance contributions (with or without
modifications),

(b) make provision in relation to national insurance contributions
corresponding to the tax-only modification, or

(c) otherwise modify the Part concerned, as it has effect in relation to
20national insurance contributions, in consequence of, or for the purpose
of making provision supplementary or incidental to, the tax-only
modification.

(2) Regulations under this section—

(a) may amend, repeal or revoke any provision of an Act or instrument
25made under an Act (whenever passed or made),

(b) may make consequential, incidental, supplementary, transitional,
transitory or saving provision, and

(c) may make different provision for different cases, classes of national
insurance contributions or purposes.

(3) 30Regulations under this section must be made by statutory instrument.

(4) A statutory instrument containing (with or without other provision)
regulations under this section that amend or repeal a provision of an Act may
not be made unless a draft of the instrument has been laid before, and
approved by a resolution of, each House of Parliament.

(5) 35A statutory instrument containing regulations under this section that does not
have to be approved in draft under subsection (4) is subject to annulment in
pursuance of a resolution of either House of Parliament.

(6) In this section “national insurance contributions” means contributions under
Part 1 of SSCBA 1992 or Part 1 of SSCB(NI)A 1992.

(7) 40This section comes into force at the end of the period of 2 months beginning
with the day on which this Act is passed.

Anti-avoidance

6 Categorisation of earners etc: anti-avoidance

(1) In the Social Security (Categorisation of Earners) Regulations 1978 (S.I. 1978/
1689) (“the 1978 GB regulations”), after regulation 5 insert—

“5A 5Anti-avoidance

(1) Paragraph (2) applies if—

(a) an earner has an employment in which the earner personally
provides services to a person who is resident or present or has
a place of business in Great Britain,

(b) 10a third person enters into relevant avoidance arrangements, and

(c) but for paragraph (2), the earner would not be, and would not
be treated as falling within the category of, an employed earner
in relation to the employment.

(2) The earner is to be treated as falling within the category of an employed
15earner in relation to the employment.

(3) In paragraph (1)(b) “relevant avoidance arrangements” means
arrangements the main purpose, or one of the main purposes, of which
is to secure—

(a) that the earner is not treated under paragraph 2 of Schedule 1 as
20falling within the category of employed earner in relation to the
employment, or

(b) that a person is not treated under paragraph 2 or 9(b) or (d) of
Schedule 3 as the secondary Class 1 contributor in respect of
payments of earnings to or for the benefit of the earner in
25respect of the employment.

(4) Paragraph (5) applies if—

(a) a person (“P”) enters into arrangements the main purpose, or
one of the main purposes, of which is to secure that P is not
treated under a relevant provision as the secondary Class 1
30contributor in respect of payments of earnings to or for the
benefit of an employed earner in respect of an employment, and

(b) but for paragraph (5), no person who is resident or present or
has a place of business in Great Britain would—

(i) be the secondary Class 1 contributor in respect of such
35payments, or

(ii) be treated, under a provision other than paragraph 2(a)
or (b) or 9(g) or (h) in column (B) of Schedule 3, as the
secondary Class 1 contributor in respect of such
payments.

(5) 40If P is resident or present or has a place of business in Great Britain, P
is to be treated as the secondary Class 1 contributor in respect of such
payments.

(6) In paragraph (4)(a) a “relevant provision” means any provision of—

(a) paragraph 2 of Schedule 3, other than sub-paragraphs (a) and
45(b) of that paragraph in column (B), or

(b) paragraph 9(a) to (d) of that Schedule.

(7) In this regulation “arrangements” include any scheme, transaction or
series of transactions, agreement or understanding, whether or not
legally enforceable, and any associated operations.”

(2) In the Social Security (Categorisation of Earners) Regulations (Northern
5Ireland) 1978 (S.R. (NI) 1978 No. 401(NI) 1978 No. 401) (“the 1978 NI regulations”), after
regulation 5 insert—

“5A Anti-avoidance

(1) Paragraph (2) applies if—

(a) an earner has an employment in which the earner personally
10provides services to a person who is resident or present or has
a place of business in Northern Ireland,

(b) a third person enters into relevant avoidance arrangements, and

(c) but for paragraph (2), the earner would not be, and would not
be treated as falling within the category of, an employed earner
15in relation to the employment.

(2) The earner is to be treated as falling within the category of an employed
earner in relation to the employment.

(3) In paragraph (1)(b) “relevant avoidance arrangements” means
arrangements the main purpose, or one of the main purposes, of which
20is to secure—

(a) that the earner is not treated under paragraph 2 of Schedule 1 as
falling within the category of employed earner in relation to the
employment, or

(b) that a person is not treated under paragraph 2 or 7(b) or (d) of
25Schedule 3 as the secondary Class 1 contributor in respect of
payments of earnings to or for the benefit of the earner in
respect of the employment.

(4) Paragraph (5) applies if—

(a) a person (“P”) enters into arrangements the main purpose, or
30one of the main purposes, of which is to secure that P is not
treated under a relevant provision as the secondary Class 1
contributor in respect of payments of earnings to or for the
benefit of an employed earner in respect of an employment, and

(b) but for paragraph (5), no person who is resident or present or
35has a place of business in Northern Ireland would—

(i) be the secondary Class 1 contributor in respect of such
payments, or

(ii) be treated, under a provision other than paragraph 2(a)
or (b) or 7(g) or (h) in column (B) of Schedule 3, as the
40secondary Class 1 contributor in respect of such
payments.

(5) If P is resident or present or has a place of business in Northern Ireland,
P is to be treated as the secondary Class 1 contributor in respect of such
payments.

(6) 45In paragraph (4)(a) a “relevant provision” means any provision of—

(a) paragraph 2 of Schedule 3, other than sub-paragraphs (a) and
(b) of that paragraph in column (B), or

(b) paragraph 7(a) to (d) of that Schedule.

(7) In this regulation “arrangements” include any scheme, transaction or
series of transactions, agreement or understanding, whether or not
legally enforceable, and any associated operations.”

(3) In section 2 of SSCBA 1992 (categories of earner), after subsection (2) insert—

“(2ZA) 5Regulations under subsection (2)(b) may make provision treating a
person (“P”) as falling within one or other of the categories of earner in
relation to an employment where arrangements have been entered into
the main purpose, or one of the main purposes, of which is to secure—

(a) that P is not treated by other provision in regulations under
10subsection (2)(b) as falling within that category of earner in
relation to the employment, or

(b) that a person is not treated as the secondary contributor in
respect of earnings paid to or for the benefit of P in respect of the
employment.

(2ZB) 15In subsection (2ZA) “arrangements” include any scheme, transaction or
series of transactions, agreement or understanding, whether or not
legally enforceable, and any associated operations.”

(4) In section 7 of SSCBA 1992 (“secondary contributor”), after subsection (2)
insert—

“(2A) 20Regulations under subsection (2) may make provision treating a person
as the secondary contributor in respect of earnings paid to or for the
benefit of an earner if arrangements have been entered into the main
purpose, or one of the main purposes, of which is to secure that the
person is not so treated by other provision in regulations under
25subsection (2).

(2B) In subsection (2A) “arrangements” include any scheme, transaction or
series of transactions, agreement or understanding, whether or not
legally enforceable, and any associated operations.”

(5) In section 2 of SSCB(NI)A 1992 (categories of earner), after subsection (2)
30insert—

“(2ZA) Regulations under subsection (2)(b) may make provision treating a
person (“P”) as falling within one or other of the categories of earner in
relation to an employment where arrangements have been entered into
the main purpose, or one of the main purposes, of which is to secure—

(a) 35that P is not treated by other provision in regulations under
subsection (2)(b) as falling within that category of earner in
relation to the employment, or

(b) that a person is not treated as the secondary contributor in
respect of earnings paid to or for the benefit of P in respect of the
40employment.

(2ZB) In subsection (2ZA) “arrangements” include any scheme, transaction or
series of transactions, agreement or understanding, whether or not
legally enforceable, and any associated operations.”

(6) In section 7 of SSCB(NI)A 1992 (“secondary contributor”), after subsection (2)
45insert—

“(2A) Regulations under subsection (2) may make provision treating a person
as the secondary contributor in respect of earnings paid to or for the

benefit of an earner if arrangements have been entered into the main
purpose, or one of the main purposes, of which is to secure that the
person is not so treated by other provision in regulations under
subsection (2).

(2B) 5In subsection (2A) “arrangements” include any scheme, transaction or
series of transactions, agreement or understanding, whether or not
legally enforceable, and any associated operations.”

(7) Subsections (1) and (2)—

(a) are to be treated as having come into force on 6 April 2014 for the
10purposes of inserting regulation 5A(1) to (5), (6)(a) and (7), and

(b) come into force for the purposes of inserting regulation 5A(6)(b) on the
day on which this Act is passed.

(8) Paragraphs (4) and (5) of regulation 5A have effect in relation to arrangements
entered into on or after 6 April 2014 the main purpose, or one of the main
15purposes of which, is to secure that a person is not treated, under a provision
mentioned in paragraph (6)(b) of that regulation, as the secondary Class 1
contributor in respect of payments of earnings to or for the benefit of an
employed earner in respect of an employment.

(9) But regulation 5A(5) only applies as a result of arrangements mentioned in
20subsection (8) in relation to payments of earnings that are made on or after the
day on which this Act is passed.

(10) In subsections (7) to (9) references to regulation 5A are to regulation 5A—

(a) inserted by subsection (1) into the 1978 GB regulations;

(b) inserted by subsection (2) into the 1978 NI regulations.

(11) 25The amendments made by subsections (1) and (2) are without prejudice to any
power to make regulations amending or revoking the provision inserted.

General

7 HMRC administrative expenses: financial provision

(1) In section 165 of SSAA 1992 (adjustments between the National Insurance
30Fund and Consolidated Fund)—

(a) in subsection (5)(a), for the words from “other” to “Act 2014” substitute
“relevant legislation”;

(b) after subsection (5A) insert—

“(5B) In subsection (5)(a) “relevant legislation” means—

(a) 35legislation relating to ordinary statutory paternity pay,
additional statutory paternity pay or statutory adoption
pay,

(b) the National Insurance Contributions Act 2014, or

(c) the National Insurance Contributions Act 2015.”

(2) 40In section 145 of SSA(NI)A 1992 (adjustments between the National Insurance
Fund and Consolidated Fund)—

(a) in subsection (5)(a), for the words from “other” to “Act 2014” substitute
“relevant legislation”;