National Insurance Contributions and Statutory Payments Bill

House of Commons

Session 2003 - 04
Internet Publications
Other Bills before Parliament

National Insurance Contributions and Statutory Payments Bill

National Insurance Contributions and Statutory Payments Bill
1

A
Bill
To
Make provision relating to the payment and administration of national
insurance contributions and the provision of information in connection with
the payment of statutory sick pay and statutory maternity pay, and for
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:—
Payment of Class 1 contributions
1
Payment of Class 1 contributions: Great Britain
(1)
Paragraph 3 of Schedule 1 to the Social Security Contributions and Benefits Act
1992 (c. 4) (method of paying Class 1 contributions) is amended as follows.
(2)
In sub-paragraph (3) (deduction of contributions from earnings) for “sub-
5
paragraph (4)” substitute “sub-paragraphs (3A) to (5)”.
(3)
After that sub-paragraph insert—
    “(3A)
Sub-paragraph (3B) applies where a person (“the employee”) who is
employed by a particular employer (“the employer”) receives
earnings in a form other than money (“non-monetary earnings”)
10
from the employer in a tax year.
     (3B)
If and to the extent that regulations so provide, the employer may
recover from the employee, in the prescribed manner, any primary
Class 1 contributions paid or to be paid by him on the employee’s
behalf in respect of those earnings.”
15
(4)
In sub-paragraph (4) (contributions in respect of ex-employees), in paragraph
(b) for “earnings” to the end substitute “or in the next tax year non-monetary
earnings.”
(5)
In sub-paragraph (5) (recovery of contributions in a case where sub-paragraph
(4) applies) omit from “or” at the end of paragraph (a) to the end.
20

Bill 2 53/3

National Insurance Contributions and Statutory Payments Bill
2

2
Payment of Class 1 contributions: Northern Ireland
(1)
Paragraph 3 of Schedule 1 to the Social Security Contributions and Benefits
(Northern Ireland) Act 1992 (c. 7) (method of paying Class 1 contributions) is
amended as follows.
(2)
In sub-paragraph (3) (deduction of contributions from earnings) for “sub-
5
paragraph (4)” substitute “sub-paragraphs (3A) to (5)”.
(3)
After that sub-paragraph insert—
    “(3A)
Sub-paragraph (3B) applies where a person (“the employee”) who is
employed by a particular employer (“the employer”) receives
earnings in a form other than money (“non-monetary earnings”)
10
from the employer in a tax year.
     (3B)
If and to the extent that regulations so provide, the employer may
recover from the employee, in the prescribed manner, any primary
Class 1 contributions paid or to be paid by him on the employee’s
behalf in respect of those earnings.”
15
(4)
In sub-paragraph (4) (contributions in respect of ex-employees), in paragraph
(b) for “earnings” to the end substitute “or in the next tax year non-monetary
earnings.”
(5)
In sub-paragraph (5) (recovery of contributions in a case where sub-paragraph
(4) applies) omit from “or” at the end of paragraph (a) to the end.
20
3
Agreements and joint elections: Great Britain
(1)
Schedule 1 to the Social Security Contributions and Benefits Act 1992 (c. 4)
(supplementary provisions relating to Class 1 contributions) is amended as
follows.
(2)
In paragraph 3A (restrictions on recovery of employer’s contributions)—
25
(a)
in sub-paragraph (2) for “a gain” to the end substitute “relevant
employment income of that earner.”, and
(b)
after that sub-paragraph insert—
    “(2A)
But an agreement in respect of relevant employment income
is to be disregarded for the purposes of sub-paragraph (2) to
30
the extent that it relates to relevant employment income
which is employment income of the earner by virtue of
Chapter 3A of Part 7 of ITEPA 2003 (employment income:
securities with artificially depressed market value).
     (2B)
For the purposes of sub-paragraphs (2) and (2A) “relevant
35
employment income”, in relation to the earner, means—
(a)
an amount that counts as employment income of the
earner under section 426 of ITEPA 2003 (restricted
securities: charge on certain post-acquisition events),
(b)
an amount that counts as employment income of the
40
earner under section 438 of that Act (convertible
securities: charge on certain post-acquisition events),
or
(c)
a gain that is treated as remuneration derived from
the earner’s employment by virtue of section 4(4)(a)
45
above.”

National Insurance Contributions and Statutory Payments Bill
3

(3)
In paragraph 3B (transfer of liability to be borne by the earner)—
(a)
in sub-paragraph (1), in paragraph (a)—
(i)
for “share option gains by the earner” substitute “relevant
employment income of the earner”, and
(ii)
for “such gains” substitute “such income”,
5
(b)
after that sub-paragraph insert—
    “(1A)
In this paragraph “relevant employment income”, in relation
to the earner, means—
(a)
an amount that counts as employment income of the
earner under section 426 of ITEPA 2003 (restricted
10
securities: charge on certain post-acquisition events),
(b)
an amount that counts as employment income of the
earner under section 438 of that Act (convertible
securities: charge on certain post-acquisition events),
or
15
(c)
a gain that is treated as remuneration derived from
the earner’s employment by virtue of section 4(4)(a)
above,

and references to contributions on relevant employment
income are references to any secondary Class 1 contributions
20
payable in respect of that income.”,
(c)
in sub-paragraph (2)(b) for “share option gains by the earner, or the part
of them” substitute “relevant employment income of the earner, or the
part of it”,
(d)
in sub-paragraph (3) for “sub-paragraph (7)(b)” substitute “sub-
25
paragraphs (7)(b) and (7B)”,
(e)
in sub-paragraph (7)(b) for “on share option” to the end substitute “on
relevant employment income if—
(i)
that income is within sub-paragraph (1A)(a)
or (b) and the securities, or interest in
30
securities, to which it relates were or was
acquired after the withdrawal date, or
(ii)
that income is within sub-paragraph (1A)(c)
and the right to acquire securities to which it
relates was acquired after that date.”,
35
(f)
after sub-paragraph (7) insert—
    “(7A)
In sub-paragraph (7)(b) “the withdrawal date” means—
(a)
the date on which notice of the withdrawal of the
approval is given, or
(b)
such later date as the Inland Revenue may specify in
40
that notice.
     (7B)
An election is void for the purposes of sub-paragraph (1) to
the extent that it relates to relevant employment income
which is employment income of the earner by virtue of
Chapter 3A of Part 7 of ITEPA 2003 (employment income:
45
securities with artificially depressed market value).”,
(g)
for sub-paragraph (10) substitute—
    “(10)
Subject to sub-paragraph (12) below, an election under sub-
paragraph (1) above shall not apply to any contributions in
respect of income which, before the election was made,
50

National Insurance Contributions and Statutory Payments Bill
4

counted as employment income for a tax year by virtue of
Part 7 of ITEPA 2003.”, and
(h)
omit sub-paragraph (13).
(4)
The amendments made by this section have effect in relation to—
(a)
agreements entered into after the date of commencement of this section
5
which are in respect of post-commencement employment income, and
(b)
elections made after that date.
(5)
For the purposes of subsection (4), “post-commencement employment income”
means income which is relevant employment income within paragraph 3A(2B)
of Schedule 1 to the Social Security Contributions and Benefits Act 1992 (c. 4)
10
which, after the date of commencement of this section, counts as employment
income for a tax year by virtue of Part 7 of the Income Tax (Earnings and
Pensions) Act 2003 (c. 1).
4
Agreements and joint elections: Northern Ireland
(1)
Schedule 1 to the Social Security Contributions and Benefits (Northern Ireland)
15
Act 1992 (c. 7) (supplementary provisions relating to Class 1 contributions) is
amended as follows.
(2)
In paragraph 3A (restrictions on recovery of employer’s contributions)—
(a)
in sub-paragraph (2) for “a gain” to the end substitute “relevant
employment income of that earner.”, and
20
(b)
after that sub-paragraph insert—
    “(2A)
But an agreement in respect of relevant employment income
is to be disregarded for the purposes of sub-paragraph (2) to
the extent that it relates to relevant employment income
which is employment income of the earner by virtue of
25
Chapter 3A of Part 7 of ITEPA 2003 (employment income:
securities with artificially depressed market value).
     (2B)
For the purposes of sub-paragraphs (2) and (2A) “relevant
employment income”, in relation to the earner, means—
(a)
an amount that counts as employment income of the
30
earner under section 426 of ITEPA 2003 (restricted
securities: charge on certain post-acquisition events),
(b)
an amount that counts as employment income of the
earner under section 438 of that Act (convertible
securities: charge on certain post-acquisition events),
35
or
(c)
a gain that is treated as remuneration derived from
the earner’s employment by virtue of section 4(4)(a)
above.”
(3)
In paragraph 3B (transfer of liability to be borne by the earner)—
40
(a)
in sub-paragraph (1), in paragraph (a)—
(i)
for “share option gains by the earner” substitute “relevant
employment income of the earner”, and
(ii)
for “such gains” substitute “such income”,
(b)
after that sub-paragraph insert—
45
    “(1A)
In this paragraph “relevant employment income”, in relation
to the earner, means—

National Insurance Contributions and Statutory Payments Bill
5

(a)
an amount that counts as employment income of the
earner under section 426 of ITEPA 2003 (restricted
securities: charge on certain post-acquisition events),
(b)
an amount that counts as employment income of the
earner under section 438 of that Act (convertible
5
securities: charge on certain post-acquisition events),
or
(c)
a gain that is treated as remuneration derived from
the earner’s employment by virtue of section 4(4)(a)
above,
10

and references to contributions on relevant employment
income are references to any secondary Class 1 contributions
payable in respect of that income.”,
(c)
in sub-paragraph (2)(b) for “share option gains by the earner, or the part
of them” substitute “relevant employment income of the earner, or the
15
part of it”,
(d)
in sub-paragraph (3) for “sub-paragraph (7)(b)” substitute “sub-
paragraphs (7)(b) and (7B)”,
(e)
in sub-paragraph (7)(b) for “on share option” to the end substitute “on
relevant employment income if—
20
(i)
that income is within sub-paragraph (1A)(a)
or (b) and the securities, or interest in
securities, to which it relates were or was
acquired after the withdrawal date, or
(ii)
that income is within sub-paragraph (1A)(c)
25
and the right to acquire securities to which it
relates was acquired after that date.”,
(f)
after sub-paragraph (7) insert—
    “(7A)
In sub-paragraph (7)(b) “the withdrawal date” means—
(a)
the date on which notice of the withdrawal of the
30
approval is given, or
(b)
such later date as the Inland Revenue may specify in
that notice.
     (7B)
An election is void for the purposes of sub-paragraph (1) to
the extent that it relates to relevant employment income
35
which is employment income of the earner by virtue of
Chapter 3A of Part 7 of ITEPA 2003 (employment income:
securities with artificially depressed market value).”,
(g)
for sub-paragraph (10) substitute—
    “(10)
Subject to sub-paragraph (12) below, an election under sub-
40
paragraph (1) above shall not apply to any contributions in
respect of income which, before the election was made,
counted as employment income for a tax year by virtue of
Part 7 of ITEPA 2003.”, and
(h)
omit sub-paragraph (13).
45
(4)
The amendments made by this section have effect in relation to—
(a)
agreements entered into after the date of commencement of this section
which are in respect of post-commencement employment income, and
(b)
elections made after that date.

National Insurance Contributions and Statutory Payments Bill
6

(5)
For the purposes of subsection (4), “post-commencement employment income”
means income which is relevant employment income within paragraph 3A(2B)
of Schedule 1 to the Social Security Contributions and Benefits (Northern
Ireland) Act 1992 (c. 7) which, after the date of commencement of this section,
counts as employment income for a tax year by virtue of Part 7 of the Income
5
Tax (Earnings and Pensions) Act 2003 (c. 1).
Method of recovery of contributions etc
5
Recovery of contributions, etc: Great Britain
(1)
In section 121A(1)(b) of the Social Security Administration Act 1992 (c. 5) (time
limit for compliance with certificate of non-payment of contributions, etc in
10
England and Wales), for “30 days” substitute “7 days”.
(2)
In section 121B(1) of that Act (time limit for compliance with certificate of non-
payment of contributions, etc in Scotland), for “30 days” substitute “14 days”.
(3)
In section 121C of that Act (liability of directors etc for company’s
contributions), after subsection (8) insert—
15
“(8A)
The amount which an officer is liable to pay under this section is to be
recovered in the same manner as a Class 1 contribution to which
regulations under paragraph 6 of Schedule 1 to the Contributions and
Benefits Act apply and for this purpose references in those regulations
to Class 1 contributions are to be construed accordingly.”
20
(4)
After paragraph 7B of Schedule 1 to the Social Security Contributions and
Benefits Act 1992 (c. 4) (collection of contributions otherwise than through
PAYE system) insert—
“7BZA (1)
  The Inland Revenue may by regulations provide for Class 1, Class
1A, Class 1B or Class 2 contributions to which regulations under
25
paragraph 7B apply to be recovered in a similar manner to income
tax.
      (2)
Regulations under sub-paragraph (1) may apply or extend with or
without modification in relation to such contributions any of the
provisions of the Income Tax Acts or of PAYE regulations.
30
      (3)
Any reference to contributions in this paragraph shall be construed
as including a reference to any interest or penalty payable, in respect
of contributions, by virtue of regulations under paragraph (e) or (h)
of paragraph 7B(2).”
6
Recovery of contributions, etc: Northern Ireland
35
(1)
For section 115A of the Social Security Administration (Northern Ireland) Act
1992 (c. 8) (recovery of contributions, etc) substitute—
“115A  Recovery of contributions, etc
(1)
If—
(a)
a person is served at any time with a copy of a certificate under
40
section 112(1), and
(b)
he neglects or refuses to pay the contributions, interest or
penalty to which the certificate relates within 7 days of that
time,

National Insurance Contributions and Statutory Payments Bill
7


an authorised officer may distrain upon the goods and chattels of that
person (“the person in default”).
(2)
For the purpose of levying any such distress, a justice of the peace, on
being satisfied by a complaint on oath that there is reasonable ground
for believing that the conditions in subsection (1) are fulfilled, may
5
issue a warrant in writing authorising the authorised officer to enter in
the daytime, by force if necessary, any premises to which this section
applies, calling on the assistance of any constable.
(3)
Every such constable shall, when so required, assist the authorised
officer in the execution of the warrant and in levying the distress in the
10
premises.
(4)
A warrant to enter premises by force shall be executed by the
authorised officer, or under his direction and in his presence.
(5)
A distress levied by the authorised officer shall be kept for 5 days, and
any costs or charges shall be borne by the person in default.
15
(6)
If the person in default does not pay the sum due, together with the
costs and charges, the distress shall be appraised by one or more
independent persons appointed by the authorised officer, and shall be
sold by public auction by the authorised officer for payment of the sum
due and all costs and charges.
20
(7)
Any surplus arising from the distress, after the deduction of the costs
and charges and of the sum due, shall be paid to the owner of the goods
distrained.
(8)
Regulations made by the Inland Revenue may make provision with
respect to—
25
(a)
the fees chargeable on or in connection with the levying of
distress; and
(b)
the costs and charges recoverable where distress has been
levied.
(9)
In this section “authorised officer” means an officer of the Inland
30
Revenue authorised by them for the purposes of this section.
(10)
The premises to which this section applies are premises where an
authorised officer has reasonable grounds for believing that—
(a)
any persons are employed, or
(b)
a trade or business is being carried on;
35

but this section does not apply to a private dwelling-house unless an
authorised officer has reasonable grounds for believing that a trade or
business is being carried on from the dwelling-house and that the trade
or business is not also being carried on from premises other than a
dwelling-house.”
40
(2)
In section 115B of that Act (liability of directors etc for company’s
contributions), after subsection (8) insert—
“(8A)
The amount which an officer is liable to pay under this section is to be
recovered in the same manner as a Class 1 contribution to which
regulations under paragraph 6 of Schedule 1 to the Contributions and
45
Benefits Act apply and for this purpose references in those regulations
to Class 1 contributions are to be construed accordingly.”