National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill (HL Bill 184)

A

BILL

TO

Provide for Class 1A national insurance contributions on certain termination
awards; and to provide for the controller of a sporting testimonial to be the
person liable to pay Class 1A national insurance contributions on payments
from money raised by the testimonial.

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—

Part 1 Termination awards

1 Termination awards: Great Britain

(1) Section 10 of the Social Security Contributions and Benefits Act 1992 (Class 1A
5contributions: benefits in kind etc.) is amended as follows.

(2) After subsection (1) insert—

(1A) A Class 1A contribution is payable for a tax year, in accordance with
this section, in respect of an earner and the amount of a termination
award if and so far as—

(a) 10that amount counts as employment income of the earner under
section 403 of ITEPA 2003 (charge on termination payments or
benefits), and

(b) the earner is chargeable to income tax on that amount for the tax
year by virtue of that section.

(1B) 15No Class 1A contribution is payable under subsection (1A) in respect of
an amount so far as it is an amount of earnings in respect of which Class
1 contributions are payable.

(1C) No Class 1A contribution is payable under subsection (1A) unless the
employment which is terminated is employed earner’s employment.”

National Insurance Contributions (Termination Awards and Sporting Testimonials) BillPage 2

(3) In subsection (2), in the words before paragraph (a), after “contribution” insert
“payable under subsection (1)”.

(4) After subsection (3) insert—

(3A) A Class 1A contribution payable under subsection (1A) is payable by
5the person who, if the amount in respect of which the Class 1A
contribution is payable were earnings in respect of which Class 1
contributions would be payable, would be liable to pay the secondary
Class 1 contribution.”

(5) In subsection (4) after “contribution” insert “payable under subsection (1)”.

(6) 10After subsection (4) insert—

(4A) The amount of the Class 1A contribution payable under subsection
(1A) in respect of an amount is the Class 1A percentage of that amount.”

(7) In subsection (5) for “subsection (4)” substitute “subsections (4) and (4A)”.

(8) In subsection (9)(a) for “or general earnings” substitute “, general earnings or
15termination awards”.

(9) After subsection (11) insert—

(12) In this section “termination award” means a payment or benefit
received by an earner (or an earner’s spouse, civil partner, blood
relative or dependant) in connection with the termination of the
20earner’s employment.”

(10) In the heading, omit “: benefits in kind etc.

(11) In section 162(5) of the Social Security Administration Act 1992 (appropriate
national health service allocation), in paragraph (c), after “general earnings”
insert “and the amounts chargeable to income tax under section 403 of the
25Income Tax (Earnings and Pensions) Act 2003”.

2 Termination awards: Northern Ireland

(1) Section 10 of the Social Security Contributions and Benefits (Northern Ireland)
Act 1992 (Class 1A contributions: benefits in kind etc.) is amended as follows.

(2) After subsection (1) insert—

(1A) 30A Class 1A contribution is payable for a tax year, in accordance with
this section, in respect of an earner and the amount of a termination
award if and so far as—

(a) that amount counts as employment income of the earner under
section 403 of ITEPA 2003 (charge on termination payments or
35benefits), and

(b) the earner is chargeable to income tax on that amount for the tax
year by virtue of that section.

(1B) No Class 1A contribution is payable under subsection (1A) in respect of
an amount so far as it is an amount of earnings in respect of which Class
401 contributions are payable.

(1C) No Class 1A contribution is payable under subsection (1A) unless the
employment which is terminated is employed earner’s employment.”

National Insurance Contributions (Termination Awards and Sporting Testimonials) BillPage 3

(3) In subsection (2), in the words before paragraph (a), after “contribution” insert
“payable under subsection (1)”.

(4) After subsection (3) insert—

(3A) A Class 1A contribution payable under subsection (1A) is payable by
5the person who, if the amount in respect of which the Class 1A
contribution is payable were earnings in respect of which Class 1
contributions would be payable, would be liable to pay the secondary
Class 1 contribution.”

(5) In subsection (4) after “contribution” insert “payable under subsection (1)”.

(6) 10After subsection (4) insert—

(4A) The amount of the Class 1A contribution payable under subsection
(1A) in respect of an amount is the Class 1A percentage of that amount.”

(7) In subsection (5) for “subsection (4)” substitute “subsections (4) and (4A)”.

(8) In subsection (9)(a) for “or general earnings” substitute “, general earnings or
15termination awards”.

(9) After subsection (11) insert—

(12) In this section “termination award” means a payment or benefit
received by an earner (or an earner’s spouse, civil partner, blood
relative or dependant) in connection with the termination of the
20earner’s employment.”

(10) In the heading, omit “: benefits in kind etc.

(11) In section 142(5) of the Social Security Administration (Northern Ireland) Act
1992 (appropriate health service allocation), in paragraph (c), after “general
earnings” insert “and the amounts chargeable to income tax under section 403
25of the Income Tax (Earnings and Pensions) Act 2003”.

Part 2 Sporting testimonials

3 Sporting testimonials: Great Britain

(1) The Social Security Contributions and Benefits Act 1992 is amended as follows.

(2) 30In section 10 (Class 1A contributions: benefits in kind etc) in subsection (2) for
“section 10ZA below” substitute “sections 10ZA and 10ZBA”.

(3) In section 10ZA (liability of third party provider of benefits in kind) after
subsection (1) insert—

(1A) This section does not apply if the benefit is a sporting testimonial
35payment (see section 10ZBA).”

(4) After section 10ZB insert—

10ZBA Liability of third party controller of sporting testimonial

(1) This section applies where—

National Insurance Contributions (Termination Awards and Sporting Testimonials) BillPage 4

(a) a Class 1A contribution is payable for any tax year in respect of
the whole or any part of general earnings received by an earner;

(b) the general earnings, in so far as they are ones in respect of
which such a contribution is payable, consist in a sporting
5testimonial payment; and

(c) the controller of the sporting testimonial is not the person (“the
relevant employer”) by whom, but for this section, the Class 1A
contribution would be payable in accordance with section 10(2).

(2) The controller of the sporting testimonial, instead of the relevant
10employer, is liable to pay any Class 1A contribution in respect of the
sporting testimonial payment.

(3) Subsection (4) applies if—

(a) the controller of the sporting testimonial pays an amount (“the
amount to cover tax”) for the purpose of discharging any
15liability of the earner to income tax for any tax year (“the
relevant year”), and

(b) the income tax in question is tax chargeable in respect of the
sporting testimonial payment or of the amount to cover tax.

(4) For the purposes of this Act the amount to cover tax is to be treated as
20if it were general earnings consisting in the making of a sporting
testimonial payment to the earner in the relevant year and falling, for
the purposes of Class 1 contributions, to be left out of account in the
computation of the earnings paid to or for the benefit of the earner.

(5) The controller of the sporting testimonial, instead of the relevant
25employer, is liable to pay any Class 1A contribution in respect of any
further sporting testimonial payment treated as made to the earner in
accordance with subsection (4).

(6) Expressions used in this section and section 226E of ITEPA 2003
(sporting testimonial payments) have the same meaning as in that
30section.”

4 Sporting testimonials: Northern Ireland

(1) The Social Security Contributions and Benefits (Northern Ireland) Act 1992 is
amended as follows.

(2) In section 10 (Class 1A contributions: benefits in kind etc) in subsection (2) for
35“section 10ZA below” substitute “sections 10ZA and 10ZBA”.

(3) In section 10ZA (liability of third party provider of benefits in kind) after
subsection (1) insert—

(1A) This section does not apply if the benefit is a sporting testimonial
payment (see section 10ZBA).”

(4) 40After section 10ZB insert—

10ZBA Liability of third party controller of sporting testimonial

(1) This section applies where—

(a) a Class 1A contribution is payable for any tax year in respect of
the whole or any part of general earnings received by an earner;

National Insurance Contributions (Termination Awards and Sporting Testimonials) BillPage 5

(b) the general earnings, in so far as they are ones in respect of
which such a contribution is payable, consist in a sporting
testimonial payment; and

(c) the controller of the sporting testimonial is not the person (“the
5relevant employer”) by whom, but for this section, the Class 1A
contribution would be payable in accordance with section 10(2).

(2) The controller of the sporting testimonial, instead of the relevant
employer, is liable to pay any Class 1A contribution in respect of the
sporting testimonial payment.

(3) 10Subsection (4) applies if—

(a) the controller of the sporting testimonial pays an amount (“the
amount to cover tax”) for the purpose of discharging any
liability of the earner to income tax for any tax year (“the
relevant year”), and

(b) 15the income tax in question is tax chargeable in respect of the
sporting testimonial payment or of the amount to cover tax.

(4) For the purposes of this Act the amount to cover tax is to be treated as
if it were general earnings consisting in the making of a sporting
testimonial payment to the earner in the relevant year and falling, for
20the purposes of Class 1 contributions, to be left out of account in the
computation of the earnings paid to or for the benefit of the earner.

(5) The controller of the sporting testimonial, instead of the relevant
employer, is liable to pay any Class 1A contribution in respect of any
further sporting testimonial payment treated as made to the earner in
25accordance with subsection (4).

(6) Expressions used in this section and section 226E of ITEPA 2003
(sporting testimonial payments) have the same meaning as in that
section.”

 Part 3 30General

5 Extent, commencement and short title

(1) In this Act—

(a) sections 1 and 3 extend to England and Wales and Scotland;

(b) sections 2 and 4 extend to Northern Ireland;

(c) 35this section extends to England and Wales, Scotland and Northern
Ireland.

(2) This section comes into force on the day this Act is passed.

(3) The other provisions of this Act come into force on such day as the Treasury
may appoint by regulations made by statutory instrument.

(4) 40Regulations—

(a) may appoint different days for different purposes or different areas;

(b) may include transitional, transitory or saving provision.

(5) This Act may be cited as the National Insurance Contributions (Termination
Awards and Sporting Testimonials) Act 2019.