National Insurance Contributions Bill

House of Commons

Session 2010 - 11
Internet Publications
Other Bills before Parliament

National Insurance Contributions Bill

National Insurance Contributions Bill
Part 1 — Increases in rates
1

A
Bill
To
Make provision for and in connection with increasing rates of national
insurance contributions and a regional secondary Class 1 contributions
holiday for new businesses.
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
Increases in rates
1
Class 1 contributions
(1)
In section 8(2) of SSCBA 1992 and SSCB(NI)A 1992 (calculation of primary
Class 1 percentages)—
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(a)
in paragraph (a) (main primary percentage), for “11” substitute “12”,
and
(b)
in paragraph (b) (additional primary percentage), for “1” substitute “2”.
(2)
In section 9(2) of SSCBA 1992 and SSCB(NI)A 1992 (calculation of secondary
Class 1 percentage), for “12.8” substitute “13.8”.
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2
Class 4 contributions
(1)
In section 15(3ZA) of SSCBA 1992 and SSCB(NI)A 1992 (Class 4 percentages)—
(a)
in paragraph (a) (main Class 4 percentage), for “8” substitute “9”, and
(b)
in paragraph (b) (additional Class 4 percentage), for “1” substitute “2”.
(2)
In section 143(4)(b) of SSAA 1992 (power to alter contributions with a view to
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adjusting level of National Insurance Fund: main Class 4 percentage not to be
increased to more than 8.25 per cent), for “8.25” substitute “9.25”.
3
Increased product of additional rates to be paid into National Insurance Fund
In section 162(5) of SSAA 1992 and section 142(5) of SSA(NI)A 1992
(destination of contributions: 100 per cent of product of additional primary
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Bill 79
55/1

National Insurance Contributions Bill
Part 2 — Regional secondary contributions holiday for new businesses
2

percentage rate and additional Class 4 percentage rate to form part of health
service allocation), for “100” substitute “50”.
Part 2
Regional secondary contributions holiday for new businesses
4
Holiday for new businesses
5
(1)
This section applies where—
(a)
a person, or a number of persons in partnership, (“P”) starts a new
business during the relevant period,
(b)
the principal place at which the new business is carried on when it is
started is not in any of the excluded regions, and
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(c)
one or more persons are qualifying employees in relation to the new
business.
(2)
The appropriate amount in respect of each qualifying employee may be—
(a)
deducted from Class 1 contributions payments which P is liable to
make, or
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(b)
refunded to P.
(3)
Section 5 defines what is meant by “starting a new business”.
(4)
“The relevant period” is the period—
(a)
beginning with 22 June 2010, and
(b)
ending with 5 September 2013.
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(5)
“The excluded regions” are Greater London, the South East Region and the
Eastern Region.
(6)
Section 6 specifies when a person is a qualifying employee in relation to a new
business.
(7)
Section 7 specifies what is the appropriate amount in respect of a qualifying
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employee.
(8)
Section 8 explains how a deduction or refund is made.
(9)
Section 9 makes provision requiring the retention of records.
(10)
Section 10 contains an anti-avoidance rule.
(11)
Section 11 makes provision for the interpretation of this Part.
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5
Starting a new business
(1)
P “starts” a new business when P begins to carry on a new business.
(2)
A business is not a “new” business if—
(a)
P has, at any time during the period of 6 months ending with the time
when P begins to carry it on, carried on another business consisting of
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the activities of which the business consists (or most of them), or
(b)
P carries it on as a result of a transfer (within the meaning of subsection
(3)).

National Insurance Contributions Bill
Part 2 — Regional secondary contributions holiday for new businesses
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(3)
P carries on a business as a result of a transfer if P begins to carry on the
business on another person ceasing to carry on the activities of which it consists
(or most of them) in consequence of arrangements involving P and the other
person.
(4)
For the purposes of subsection (3) P is to be taken to begin to carry on a
5
business on another person ceasing to carry on such activities if—
(a)
the business begins to be carried on by P otherwise than in partnership
on such activities ceasing to be carried on by persons in partnership, or
(b)
P is a number of persons in partnership who begin to carry on the
business on such activities ceasing to be carried on—
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(i)
by a person, or a number of persons, otherwise than in
partnership,
(ii)
by persons in a partnership not consisting only of all the
persons constituting P, or
(iii)
partly as mentioned in sub-paragraph (i) and partly as
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mentioned in sub-paragraph (ii).
(5)
P is not to be regarded as starting a new business by beginning to carry on a
business if—
(a)
before P begins to carry on the business, P is a party to arrangements
under which P may (at any time during the relevant period) carry on as
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part of the business activities carried on by any other person, and
(b)
the business would have been prevented by subsection (2)(b) from
being a new business had—
(i)
P begun to carry on the activities when beginning to carry on
the business, and
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(ii)
the other person at that time ceased to carry them on.
(6)
In this section “business” means something which is—
(a)
a trade, profession or vocation for the purposes of the Income Tax Acts
or the Corporation Tax Acts,
(b)
a property business (within the meaning of section 263(6) of the Income
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Tax (Trading and Other Income) Act 2005), or
(c)
an investment business (that is, a business consisting wholly or partly
of making investments).
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Qualifying employees
(1)
A person is a “qualifying employee” in relation to a new business if—
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(a)
the person first becomes employed as an employed earner for the
purposes of the new business before the end of the initial period, and
(b)
P is the secondary contributor in relation to any payment of earnings to
or for the benefit of the person in respect of the employment at any time
during the period that is the holiday period in relation to the person.
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(2)
Where (apart from this subsection) there would be more than 10 qualifying
employees, only the first 10 persons who become qualifying employees are
qualifying employees.
(3)
The “initial period” means the period of one year beginning with—
(a)
the date on which P starts the new business, or
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(b)
if earlier, the first date on which a person first becomes employed as an
employed earner for the purposes of the new business,

National Insurance Contributions Bill
Part 2 — Regional secondary contributions holiday for new businesses
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but if the first date on which a person first becomes employed as an employed
earner for the purposes of the new business is before 22 June 2010, the person
is to be taken for the purposes of paragraph (b) as first so employed on that
date.
(4)
The “holiday period”, in relation to a person, is the period—
5
(a)
beginning with the day on which the person first becomes employed as
an employed earner for the purposes of the new business or, if the
person first becomes so employed before 6 September 2010, with that
date, and
(b)
ending with the earlier of—
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(i)
the end of the period of one year beginning with the day on
which it begins, and
(ii)
the end of the relevant period.
(5)
None of the following has effect for the purposes of this Part—
(a)
the Social Security Contributions (Intermediaries) Regulations 2000
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(S.I. 2000/727) and the Social Security Contributions (Intermediaries)
(Northern Ireland) Regulations 2000 (S.I. 2000/728) (which provide in
certain cases for an intermediary to be treated as the secondary
contributor in relation to the payment of earnings), and
(b)
the Social Security Contributions (Managed Service Companies)
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Regulations 2007 (S.I. 2007/2070) (which provide in certain cases for a
managed service company to be treated as the secondary contributor in
relation to the payment of earnings).
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The appropriate amount
(1)
The appropriate amount in respect of a qualifying employee is the relevant
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amount of secondary Class 1 contributions.
(2)
“The relevant amount of secondary Class 1 contributions” is the amount of
secondary Class 1 contributions which P is liable to pay in respect of relevant
earnings.
(3)
“Relevant earnings” are earnings paid to or for the benefit of the qualifying
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employee, in respect of employment as an employed earner for the purposes
of the new business, at any time during the holiday period when the principal
place at which the business is carried on is not in any of the excluded regions.
(4)
But if (apart from this subsection) the relevant amount of secondary Class 1
contributions would exceed £5,000, it is the first £5,000 which P becomes liable
35
to pay.
(5)
In the case of a qualifying employee who is a mariner, the reference in
subsection (3) to earnings paid at any time during the holiday period includes,
in relation to earnings paid for a voyage beginning in the holiday period but
ending after it, earnings earned in the part of the voyage period falling within
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the holiday period.

“Mariner” and “voyage period” have the meaning given by regulation 115 of
the 2001 Regulations.
(6)
If P is liable to pay secondary Class 1 contributions at the contracted-out rate,
P is to be treated for the purposes of subsection (2) as liable to pay them at the
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non-contracted-out rate; and for this purpose “contracted-out rate” and “non-
contracted-out rate” have the same meaning as in the 2001 Regulations.