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Social Security Contributions and Benefits Act 1992

Type Public General Act

Publication 1992-02-13

Last updated 2026-05-06

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(b) as to the manner of assessing whether a person is, in accordance with a personal capability assessment, incapable of work.

(3) Regulations may provide that, in any prescribed circumstances, a person to whom subsection (1) above applies shall, if the prescribed conditions are met, be treated as incapable of work in accordance with a personal capability assessment until such time as—

(a) such an assessment has been carried out in his case, or

(b) he falls to be treated as capable of work in accordance with regulations under section 171A(2) or (3) above or section 171E below.

The prescribed conditions may include the condition that it has not previously been determined, within such period as may be prescribed, that the person in question is or is to be treated as capable of work.

(4) Except in prescribed circumstances, a personal capability assessment carried out in the case of a person before the time when subsection (1) above applies to him shall be as effective for the purposes of that subsection as one carried out thereafter.

(5) The Secretary of State may, in the case of a person who for any purpose of this Act has been determined to be incapable of work in accordance with a personal capability assessment (including one carried out by virtue of this subsection), require the question whether the person is capable or incapable of work to be determined afresh in accordance with a further personal capability assessment.

Incapacity for work: persons to be treated as incapable or capable of work.

171D

(1) Regulations may provide that a person shall be treated as capable of work, or as incapable of work, in such cases or circumstances as may be prescribed.

(2) Regulations may, in particular, provide that a person shall be treated as capable of work if he does work of a prescribed description, or more than the prescribed amount of work of a prescribed description.

Accordingly regulations may provide that a person shall not be treated as capable of work by reason only of his doing such work as may be prescribed, or no more than the prescribed amount of work of a prescribed description.

Incapacity for work: disqualification, &c.

171E

(1) Regulations may provide for disqualifying a person for receiving any benefit, allowance or other advantage under any provision for the purposes of which this Part of this Act applies, or, in such cases as may be prescribed, provide that a person shall be treated as capable of work, if—

(a) he has become incapable of work through his own misconduct;

(b) he fails without good cause to attend for or submit himself to such medical or other treatment as may be required in accordance with the regulations; or

(2) Regulations shall provide that any such disqualification shall be, or as the case may be that the person shall be treated as capable of work, for such period not exceeding 6 weeks as may be determined in accordance with Chapter II of Part I of the Social Security Act 1998.

(3) Regulations may prescribe for the purposes of this section—

(a) matters which are or are not to be taken into account in determining whether a person does or does not have good cause for any act or omission, or

(b) circumstances in which a person is or is not to be regarded as having or not having good cause for any act or omission.

Incapacity for work: work as councillor to be disregarded.

171F

(1) In determining whether a person is capable or incapable of work, there shall be disregarded any work which that person has undertaken as a councillor.

(2) For this purpose “councillor” means—

(a) in relation to England and Wales, a member of a London borough council, a county or county borough council, a district council, a parish or community council, the Common Council of the City of London or the Council of the Isles of Scilly; and

(b) in relation to Scotland, a member of a regional, islands or district council.

(3) The reference in subsection (1) above to the work which a person undertakes as a councillor shall be taken to include any work which he undertakes as a member of any of the bodies referred to in section 177(1) of the Local Government Act 1972, or section 49(1) or (1A) of the Local Government (Scotland) Act 1973, of which he is a member by virtue of his being a councillor.

(4) In making any such determination as is mentioned in subsection (1) above a person shall be treated as having been incapable of work on any day which falls in the pre-commencement period and which—

(a) would have been treated as a day on which he was so incapable, were there disregarded any work which he undertook (or was capable of undertaking) as a councillor; but

(b) would not have been so treated apart from this subsection.

The “pre-commencement period” means the period beginning with 11th May 1987 and ending immediately before 9th October 1989 (the coming into force of paragraph 2 of Schedule 8 to the Social Security Act 1989 which made provision corresponding to the provision made by this section).

Incapacity for work: supplementary provisions.

171G

(1) The provisions of this Part of this Act do not apply—

(a) for the purposes of Part V of this Act (benefit for industrial injuries: see section 94(6) above);

(b) for the purposes of Part XI of this Act (statutory sick pay: see section 151(4) above); or

(2) In this Part of this Act—

“prescribed” means specified in or determined in accordance with regulations; and

“week” means any period of 7 days.

Part XIII — General

Interpretation

Application of Act in relation to territorial waters.

172

In this Act—

(a) any reference to Great Britain includes a reference to the territorial waters of the United Kingdom adjacent to Great Britain;

(b) any reference to the United Kingdom includes a reference to the territorial waters of the United Kingdom.

Age.

173

For the purposes of this Act a person—

(a) is over or under a particular age if he has or, as the case may be, has not attained that age; and

(b) is between two particular ages if he has attained the first but not the second;

and in Scotland (as in England and Wales) the time at which a person attains a particular age expressed in years is the commencement of the relevant anniversary of the date of his birth.

References to Acts.

174

In this Act—

“the 1975 Act” means the Social Security Act 1975;

“the 1986 Act” means the Social Security Act 1986;

“the Administration Act” means the Social Security Administration Act 1992;

“the Consequential Provisions Act” means the Social Security (Consequential Provisions) Act 1992;

“the Northern Ireland Contributions and Benefits Act” means the Social Security Contributions and Benefits (Northern Ireland) Act 1992;

“the Old Cases Act” means the Industrial Injuries and Diseases (Old Cases) Act 1975; and

“the Pensions Act” means the Pension Schemes Act 1993.

Subordinate legislation

Regulations, orders and schemes.

175

(1) Subject to subsection (1A) below, regulations and orders under this Act shall be made by the Secretary of State.

(1A) Subsection (1) above has effect subject to—

(a) any provision ... providing for regulations or an order to be made by the Treasury or by the Commissioners of Inland Revenue, ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) Powers under this Act to make regulations, orders or schemes shall be exercisable by statutory instrument.

(3) Except in the case of an order under section 145(3) above and in so far as this Act otherwise provides, any power under this Act to make regulations or an order may be exercised—

(a) either in relation to all cases to which the power extends, or in relation to those cases subject to specified exceptions, or in relation to any specified cases or classes of case;

(b) so as to make, as respects the cases in relation to which it is exercised—

(i) the full provision to which the power extends or any less provision (whether by way of exception or otherwise),

(ii) the same provision for all cases in relation to which the power is exercised, or different provision for different cases or different classes of case or different provision as respects the same case or class of case for different purposes of this Act,

(iii) any such provision either unconditionally or subject to any specified condition;

and where such a power is expressed to be exercisable for alternative purposes it may be exercised in relation to the same case for any or all of those purposes; and powers to make regulations or an order for the purposes of any one provision of this Act are without prejudice to powers to make regulations or an order for the purposes of any other provision.

(4) Without prejudice to any specific provision in this Act, any power conferred by this Act to make regulations or an order (other than the power conferred in section 145(3) above) includes power to make thereby such incidental, supplementary, consequential or transitional provision as appears to the person making the regulations or order to be expedient for the purposes of the regulations or order.

(5) Without prejudice to any specific provisions in this Act, a power conferred by any provision of this Act except—

(a) sections 30, 47(6), 25B(2)(a) and 145(3) above and paragraph 3(9) of Schedule 7 to this Act;

(b) section 122(1) above in relation to the definition of “payments by way of occupational or personal pension”; and

to make regulations or an order includes power to provide for a person to exercise a discretion in dealing with any matter.

(6) Any power conferred by this Act to make orders or regulations relating to housing benefit or council tax benefit shall include power to make different provisions for different areas.

(7) Any power of the Secretary of State under any provision of this Act, except the provisions mentioned in subsection (5)(a) and (b) above and Part IX, to make any regulations or order, where the power is not expressed to be exercisable with the consent of the Treasury, shall if the Treasury so direct be exercisable only in conjunction with them.

(8) Any power under any of sections 116 to 120 above to modify provisions of this Act or the Administration Act extends also to modifying so much of any other provision of this Act or that Act as re-enacts provisions of the 1975 Act which replaced provisions of the National Insurance (Industrial Injuries) Acts 1965 to 1974.

(9) A power to make regulations under any of sections 116 to 120 above shall be exercisable in relation to any enactment passed after this Act which is directed to be construed as one with this Act; but this subsection applies only so far as a contrary intention is not expressed in the enactment so passed, and is without prejudice to the generality of any such direction.

(10) Any reference in this section or section 176 below to an order or regulations under this Act includes a reference to an order or regulations made under any provision of an enactment passed after this Act and directed to be construed as one with this Act; but this subsection applies only so far as a contrary intention is not expressed in the enactment so passed, and without prejudice to the generality of any such direction.

Parliamentary control.

176

(1) Subject to the provisions of this section, a statutory instrument containing (whether alone or with other provisions)—

(za) regulations under section 5 specifying the lower earnings limit for the tax year following the designated tax year (see section 5(4) of the Pensions Act 2007) or any subsequent tax year;

(zb) regulations under section 5 specifying the upper earnings limit;

(a) regulations made by virtue of—

section 4B(2);

section 4C;

section 9A(7);

section 9B(4), (8) or (10);

section 10ZC;

section 11(8) or (9)

section 14A;

section 18;

section 18A;

section 19(4) to (6);

section 28(3);

section 30DD(5)(b) or (c);

section 45(2A);

section 104(3);

section 117;

section 118;

section 145;

section 171ZE(1);

any of sections 171ZU to 171ZY;

any of sections 171ZZ6 to 171ZZ9;

any of sections 171ZZ16 to 171ZZ19;

(aa) the first regulations made by virtue of section 23A(3)(c);

(ab) the first regulations made by virtue of section 130A(5) or (6);

(b) regulations prescribing payments for the purposes of the definition of “payments by way of occupational or personal pension” in section 122(1) above;

(bb) regulations prescribing a percentage rate for the purposes of—

(i) paragraph 3B(3) or 7B(3) of Schedule 5, or

(ii) paragraph 5(3) of Schedule 5A;

section 25B(1)

section 28(2);

section 35A(7);

section 148(3)(b);

section 157(2);

section 159A(1),

shall not be made unless a draft of the instrument has been laid before Parliament and been approved by a resolution of each House.

(2) Subsection (1) above does not apply to a statutory instrument by reason only that it contains—

(a) regulations under section 117 which the instrument states are made for the purpose of making provision consequential on the making of an order under section 141, 143, 145, 146 or 162 of the Administration Act;

(b) regulations under powers conferred by any provision mentioned in paragraph (a) of that subsection ... which are to be made for the purpose of consolidating regulations to be revoked in the instrument;

(c) regulations which, in so far as they are made under powers conferred by any provision mentioned in paragraph (a) of that subsection (other than section 145 ...), only replace provisions of previous regulations with new provisions to the same effect.

(2A) In the case of a statutory instrument containing (whether alone or with other provisions) regulations made by virtue of section 4B(2) to which subsection (1) above applies, the draft of the instrument must be laid before Parliament before the end of the period of 12 months beginning with the appropriate date.

(2B) For the purposes of subsection (2A), the “appropriate date” means—

(a) where the corresponding retrospective tax provision was passed or made before the day on which the National Insurance Contributions Act 2006 was passed, the date upon which that Act was passed, and

(b) in any other case, the date upon which the corresponding retrospective tax provision was passed or made.

(2C) For the purposes of subsection (2B), “the corresponding retrospective tax provision” in relation to the regulations means—

(a) the retrospective tax provision mentioned in subsection (1) of section 4B in relation to which the regulations are to be made by virtue of subsection (2) of that section, or

(b) where there is more than one such tax provision, whichever of those provisions was the first to be passed or made.

(3) A statutory instrument—

(a) which contains (whether alone or with other provisions) any order, regulations or scheme made under this Act by the Secretary of State, the Treasury or the Commissioners of Inland Revenue, other than an order under section 145(3) above; and

(b) which is not subject to any requirement that a draft of the instrument shall be laid before and approved by a resolution of each House of Parliament,

shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(4) Subsection (3) above does not apply to a statutory instrument by reason only that it contains an order appointing the first or second appointed year or designating the flat rate introduction year (within the meanings given by section 122(1) above).

Short title, commencement and extent

Short title, commencement and extent.

177

(1) This Act may be cited as the Social Security Contributions and Benefits Act 1992.

(2) This Act is to be read, where appropriate, with the Administration Act and the Consequential Provisions Act.

(3) The enactments consolidated by this Act are repealed, in consequence of the consolidation, by the Consequential Provisions Act.

(4) Except as provided in Schedule 4 to the Consequential Provisions Act, this Act shall come into force on 1st July 1992.

(5) The following provisions extend to Northern Ireland—

section 16 and Schedule 2;

section 116(2); and

this section.

(6) Except as provided by this section, this Act does not extend to Northern Ireland.

SCHEDULE 1

Class 1 contributions where earner employed in more than one employment

1

(1) For the purposes of determining whether Class 1 contributions are payable in respect of earnings paid to an earner in a given week and, if so, the amount of the contributions—

(a) all earnings paid to him or for his benefit in that week in respect of one or more employed earner’s employments under the same employer shall, except as may be provided by regulations, be aggregated and treated as a single payment of earnings in respect of one such employment; and

(b) earnings paid to him or for his benefit in that week by different persons in respect of different employed earner’s employments shall in prescribed circumstances be aggregated and treated as a single payment of earnings in respect of one such employment;

and regulations may provide that the provisions of this sub-paragraph shall have effect in cases prescribed by the regulations as if for any reference to a week there were substituted a reference to a period prescribed by the regulations.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) Where any single payment of earnings is made in respect of two or more employed earner’s employments under different employers, liability for Class 1 contributions shall be determined by apportioning the payment to such one or more of the employers as may be prescribed, and treating a part apportioned to any employer as a separate payment of earnings by him.

(8) Where earnings are aggregated under sub-paragraph (1)(b) above, liability (if any) for the secondary contribution shall be apportioned, in such manner as may be prescribed, between the secondary contributors concerned.

(8A) Regulations under any provision of this paragraph shall be made by the Inland Revenue.

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Earnings not paid at normal intervals

2

Regulations made by the Inland Revenue may, for the purposes of Class 1 contributions, make provision as to the intervals at which payments of earnings are to be treated as made.

Method of paying Class 1 contributions

3

(1) Where earnings are paid to an employed earner and in respect of that payment liability arises for primary and secondary Class 1 contributions, the secondary contributor shall (except in prescribed circumstances), as well as being liable for any secondary contribution of his own, be liable in the first instance to pay also the earner’s primary contribution or a prescribed part of the earner’s primary contribution, on behalf of and to the exclusion of the earner; and for the purposes of this Act and the Administration Act contributions paid by the secondary contributor on behalf of the earner shall be taken to be contributions paid by the earner.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) A secondary contributor shall be entitled, subject to and in accordance with regulations, to recover from an earner the amount of any primary Class 1 contribution paid or to be paid by him on behalf of the earner; and, subject to sub-paragraphs (3A) to (5) below but notwithstanding any other provision in any enactment, regulations under this sub-paragraph shall provide for recovery to be made by deduction from the earner’s earnings, and for it not to be made in any other way.

(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”) 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.

(4) Sub-paragraph (5) below applies in a case where—

(a) a person (“the employee”) ceases in a particular tax year (“the cessation year”) to be employed by a particular employer (“the employer”); and

(b) the employee receives from the employer in the cessation year, after the cessation of the employment, or in the next tax year non-monetary earnings.

(5) If and to the extent that regulations so provide, the employer may recover from the employee in such manner as may be prescribed any primary Class 1 contributions paid or to be paid by him on the employee’s behalf in respect of—

(a) the non-monetary earnings mentioned in sub-paragraph (4) above; ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) Regulations under any provision of this paragraph shall be made by the Inland Revenue.

Prohibition on recovery of employer’s contributions

3A

(1) Subject to sub-paragraph (2) below, a person who is or has been liable to pay any secondary Class 1 or any Class 1A or Class 1B contributions shall not—

(a) make, from earnings paid by him, any deduction in respect of any such contributions for which he or any other person is or has been liable;

(b) otherwise recover any such contributions (directly or indirectly) from any person who is or has been a relevant earner; or

(c) enter into any agreement with any person for the making of any such deduction or otherwise for the purpose of so recovering any such contributions.

(2) Sub-paragraph (1) above does not apply to the extent that an agreement between—

(a) a secondary contributor, and

(b) any person (“the earner”) in relation to whom the secondary contributor is, was or will be such a contributor in respect of the contributions to which the agreement relates,

allows the secondary contributor to recover (whether by deduction or otherwise) the whole or any part of any secondary Class 1 contribution payable in respect of relevant employment income of that earner.

(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—

(a) 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), or

(b) any contribution, or any part of any contribution, liability to which arises as a result of regulations being given retrospective effect by virtue of section 4B(2) (earnings: power to make retrospective provision in consequence of retrospective tax legislation).

(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 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), or

(3) Sub-paragraph (2) above does not authorise any recovery (whether by deduction or otherwise)—

(a) in pursuance of any agreement entered into before 19th May 2000; or

(b) in respect of any liability to a contribution arising before the day of the passing of the Child Support, Pensions and Social Security Act 2000.

(4) In this paragraph—

“agreement” includes any arrangement or understanding (whether or not legally enforceable); and

“relevant earner”, in relation to a person who is or has been liable to pay any contributions, means an earner in respect of whom he is or has been so liable.

Transfer of liability to be borne by earner

3B

(1) This paragraph applies where—

(a) an election is jointly made by—

(i) a secondary contributor, and

(ii) a person (“the earner”) in relation to whom the secondary contributor is or will be such a contributor in respect of contributions on relevant employment income of the earner,

for the whole or a part of any liability of the secondary contributor to contributions on any such income to be transferred to the earner; and

(b) the election is one in respect of which the Inland Revenue have, before it was made, given by notice to the secondary contributor their approval to both—

(i) the form of the election; and

(ii) the arrangements made in relation to the proposed election for securing that the liability transferred by the election will be met.

(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 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

and references to contributions on relevant employment income are references to any secondary Class 1 contributions payable in respect of that income.

(2) Any liability which—

(a) arises while the election is in force, and

(b) is a liability to pay the contributions on relevant employment income of the earner, or the part of it, to which the election relates,

shall be treated for the purposes of this Act, the Administration Act and Part II of the Social Security Contributions (Transfer of Functions, etc.) Act 1999 as a liability falling on the earner, instead of on the secondary contributor.

(3) Subject to sub-paragraphs (7)(b) and (7B) below, an election made for the purposes of sub-paragraph (1) above shall continue in force from the time when it is made until whichever of the following first occurs, namely—

(a) it ceases to have effect in accordance with its terms;

(b) it is revoked jointly by both parties to the election;

(4) An approval given to the secondary contributor for the purposes of sub-paragraph (1)(b) above may be given either—

(a) for an election to be made by the secondary contributor and a particular person; or

(b) for all elections to be made, or to be made in particular circumstances, by the secondary contributor and particular persons or by the secondary contributor and persons of a particular description.

(5) The grounds on which the Inland Revenue shall be entitled to refuse an approval for the purposes of sub-paragraph (1)(b) above shall include each of the following—

(a) that it appears to the Inland Revenue that adequate arrangements have not been made for securing that the liabilities transferred by the proposed election or elections will be met by the person or persons to whom they would be so transferred; and

(b) that it appears to the Inland Revenue that they do not have sufficient information to determine whether or not grounds falling within paragraph (a) above exist.

(6) If, at any time after they have given an approval for the purposes of sub-paragraph (1)(b) above, it appears to the Inland Revenue—

(a) that the arrangements that were made or are in force for securing that liabilities transferred by elections to which the approval relates are met are proving inadequate or unsatisfactory in any respect, or

(b) that any election to which the approval relates has resulted, or is likely to result, in the avoidance or non-payment of the whole or any part of any secondary Class 1 contributions,

the Inland Revenue may withdraw the approval by notice to the secondary contributor.

(7) The withdrawal by the Inland Revenue of any approval given for the purposes of sub-paragraph (1)(b) above—

(a) may be either general or confined to a particular election or to particular elections; and

(b) shall have the effect that the election to which the withdrawal relates has no effect on contributions on relevant employment income if—

(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) and the right to acquire securities to which it relates was acquired after that date.

(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 that notice.

(7B) An election is void for the purposes of sub-paragraph (1) to the extent that it relates to —

(a) 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), or

(b) any liability, or any part of any liability, to a contribution arising as a result of regulations being given retrospective effect by virtue of section 4B(2) (earnings: power to make retrospective provision in consequence of retrospective tax legislation).

(8) Where the Inland Revenue have refused or withdrawn their approval for the purposes of sub-paragraph (1)(b) above, the person who applied for it or, as the case may be, to whom it was given may appeal ... against the Inland Revenue’s decision.

(9) On an appeal under sub-paragraph (8) above that is notified to the tribunal, the tribunal may—

(a) dismiss the appeal;

(b) remit the decision appealed against to the Inland Revenue with a direction to make such decision as the tribunal thinks fit; or

(c) in the case of a decision to withdraw an approval, quash that decision and direct that that decision is to be treated as never having been made.

(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, counted as employment income for a tax year by virtue of Part 7 of ITEPA 2003.

(11) Regulations made by the Inland Revenue may make provision with respect to the making of elections for the purposes of this paragraph and the giving of approvals for the purposes of sub-paragraph (1)(b) above; and any such regulations may, in particular—

(a) prescribe the matters that must be contained in such an election;

(b) provide for the manner in which such an election is to be capable of being made and of being confined to particular liabilities or the part of particular liabilities; and

(c) provide for the making of applications for such approvals and for the manner in which those applications are to be dealt with.

(12) Where—

(a) an election is made under this paragraph before the end of the period of three months beginning with the date of the passing of the Child Support, Pensions and Social Security Act 2000, and

(b) that election is expressed to relate to liabilities for contributions arising on or after 19th May 2000 and before the making of the election,

this paragraph shall have effect in relation to those liabilities as if sub-paragraph (2) above provided for them to be deemed to have fallen on the earner (instead of on the secondary contributor); and the secondary contributor shall accordingly be entitled to reimbursement from the earner for any payment made by that contributor in or towards the discharge of any of those liabilities.

(13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(14) In this paragraph “tribunal” means the First-tier Tribunal or, where determined under Tribunal Procedure Rules, the Upper Tribunal.

General provisions as to Class 1 contributions

4

Regulations made by the Inland Revenue may, in relation to Class 1 contributions, make provision—

(a) for calculating the amounts payable according to a scale prepared from time to time by the Inland Revenue or otherwise adjusting them so as to avoid fractional amounts or otherwise facilitate computation;

(b) for requiring that the liability in respect of a payment made in a tax week, in so far as the liability depends on any conditions as to a person’s age or retirement, shall be determined as at the beginning of the week or as at the end of it;

(c) for securing that liability is not avoided or reduced by a person following in the payment of earnings any practice which is abnormal for the employment in respect of which the earnings are paid; and

(d) without prejudice to sub-paragraph (c) above, for enabling the Inland Revenue, where they are satisfied as to the existence of any practice in respect of the payment of earnings whereby the incidence of Class 1 contributions is avoided or reduced by means of irregular or unequal payments, to give directions for securing that such contributions are payable as if that practice were not followed.

Class 1A contributions

5

Regulations made by the Inland Revenue may—

(a) make provision for calculating the amount of Class 1A contributions so as to avoid fractional amounts;

(b) modify section 10 above in relation to cases where something is provided or made available by reason of two or more employed earner’s employments under different employers.

Class 1B contributions

5A

Regulations made by the Inland Revenue may make provision for calculating the amount of Class 1B contributions so as to avoid fractional amounts.

Power to combine collection of contributions with tax

6

(1) Regulations made by the Inland Revenue may—

(a) provide for Class 1, Class 1A, Class 1B or Class 2 contributions to be paid, accounted for and recovered in a similar manner to income tax in relation to which PAYE regulations have effect;

(b) 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;

(c) make provision for the appropriation of the payments made by any person between his liabilities in respect of income tax and contributions.

(2) Without prejudice to the generality of sub-paragraph (1) above, the provision that may be made by virtue of paragraph (a) of that sub-paragraph includes in relation to Class 1, Class 1A or Class 1B contributions—

(a) provision for requiring the payment of interest on sums due in respect of Class 1, Class 1A or Class 1B contributions which are not paid by the due date, for determining the date (being, in the case of Class 1 contributions, not less than 14 days after the end of the tax year in respect of which the sums are due) from which such interest is to be calculated and for enabling the repayment or remission of such interest;

(b) provision for requiring the payment of interest on sums due in respect of Class 1, Class 1A or Class 1B contributions which fall to be repaid and for determining the date ... from which such interest is to be calculated;

(c) provision for, or in connection with, the imposition and recovery of penalties in relation to any returns required to be made which relate to Class 1, Class 1A or Class 1B contributions, but subject to sub-paragraph (7) and paragraph 7 below;

and any reference to contributions or income tax in paragraph (b) or (c) of sub-paragraph (1) above shall be construed as including a reference to any interest or penalty in respect of contributions or income tax, as the case may be.

(3) The rate of interest applicable for any purpose of this paragraph shall be the rate from time to time prescribed for that purpose under section 178 of the Finance Act 1989.

(4) Where—

(a) a decision relating to contributions falls to be made under or by virtue of section 8, 10 or 11 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999; and

(b) the decision will affect a person’s liability for, or the amount of, any interest due in respect of those contributions,

regulations under sub-paragraph (1) above shall not require any such interest to be paid until the decision has been made.

(4A) Regulations under sub-paragraph (1) above shall not require the payment of interest on a sum due in respect of a Class 1B contribution if a relevant tax appeal has been brought but not finally determined; and “a relevant tax appeal” means an appeal against a determination as to the amount of income tax in respect of which the person liable to pay the Class 1B contribution is accountable in accordance with the relevant PAYE settlement agreement.

(4B) Interest required to be paid, by virtue of sub-paragraph (2)(a) or (b) above, by regulations under sub-paragraph (1) above shall be paid without any deduction of income tax and shall not be taken into account in computing any income, profits or losses for any tax purposes.

(4C) Interest payable under section 101 of the Finance Act 2009 (late payment interest on sums due to HMRC) on sums due in respect of Class 1 contributions is not to be taken into account in computing any income, profits or losses for any tax purposes.

(5) The Secretary of State may by regulations made with the concurrence of the Inland Revenue make such provision as the Secretary of State considers expedient in consequence of any provision made by or under section 4A, 159A or 167 above.

(6) Provision made in regulations under sub-paragraph (5) above may in particular require the inclusion—

(a) in returns, certificates and other documents; or

(b) in any other form of record;

which the regulations require to be kept or produced or to which those regulations otherwise apply, of such particulars relating to relevant payments or benefits within the meaning of section 4A above or (as the case may be) to statutory sick pay, statutory maternity pay or deductions or payments made by virtue of section 167(1) above as may be prescribed by those regulations.

(7) Section 98 of the Taxes Management Act 1970 shall apply in relation to regulations made under sub-paragraph (1) or (5) as it applies in relation to PAYE regulations.

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Special penalties in the case of certain returns

7

(1) This paragraph applies where regulations under sub-paragraph (1) of paragraph 6 above make provision requiring any return which is to be made in accordance with a specified provision of regulations under that sub-paragraph (the “contributions return”) to be made—

(a) at the same time as any specified return required to be made in accordance with a provision of PAYE regulations or regulations made under section 70(1)(a) or 71 (sub-contractors) of the Finance Act 2004 to which section 98A of the Taxes Management Act 1970 applies (the “tax return”); or

(b) if the circumstances are such that the return mentioned in paragraph (a) above does not fall to be made, at a time defined by reference to the time for making that return, had it fallen to be made;

and, in a case falling within paragraph (b) above, any reference in the following provisions of this paragraph to the tax return shall be construed as a reference to the return there mentioned.

(2) Where this paragraph applies, regulations under paragraph 6(1) above may provide that section 98A of the Taxes Management Act 1970 (penalties for late, fraudulent or negligent returns) shall apply in relation to any specified provision of regulations in accordance with which the contributions return is required to be made; and where they so provide then, subject to the following provisions of this paragraph—

(a) that section shall apply in relation to the contributions return as it applies in relation to the tax return; and

(b) sections 100 to 100D and 102 to 105 of that Act shall apply in relation to a penalty under section 98A of that Act to which a person is liable by virtue of this sub-paragraph as they apply in relation to any other penalty under that section.

(3) Where a person has been required to pay a penalty under paragraph (a) of subsection (2) of section 98A of that Act (first twelve months’ default) in consequence of a failure in respect of a tax return, he shall not also be required to pay a penalty under that paragraph in respect of any failure in respect of the associated contributions return.

(4) In any case where—

(a) a person is liable to a penalty under subsection (2)(b) or (4) of that section (tax-related penalties) in respect of both a tax return and its associated contributions return, and

(b) an officer of the Inland Revenue authorised for the purposes of section 100 of that Act has determined that a penalty is to be imposed under that provision in respect of both returns,

the penalty so imposed shall be a single penalty of an amount not exceeding the limit determined under sub-paragraph (5) below.

(5) The limit mentioned in sub-paragraph (4) above is an amount equal to the sum of—

(a) the maximum penalty that would have been applicable under subsection (2)(b) or (4) of section 98A of that Act (as the case may be) for a penalty in relation to the tax return only; and

(b) the maximum penalty that would have been so applicable in relation to the associated contributions return only.

(6) So much of any single penalty imposed by virtue of sub-paragraph (4) above as is recovered by the Inland Revenue shall, after the deduction of any administrative costs of the Inland Revenue attributable to its recovery, for the purposes of making any payment into the National Insurance Fund be apportioned between income tax and contributions in the ratio T:C, where—

T is the maximum penalty that could have been imposed under the provision in question in relation to the tax return only; and

C is the maximum penalty that could have been so imposed in relation to the associated contributions return only.

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) Sub-paragraph (6) above shall have effect notwithstanding any provision which treats a penalty under section 98A of that Act as if it were tax charged in an assessment and due and payable.

(9) In the application of section 98A of that Act by virtue of this paragraph, any reference to a year of assessment shall be construed, in relation to a contributions return, as a reference to the tax year corresponding to that year of assessment.

(10) In the application of section 100D of that Act (court proceedings for penalties in cases of fraud) by virtue of this paragraph—

(a) subsection (2) shall have effect with the omission of the words “ or Northern Ireland ” and paragraph (c); and

(b) subsection (3) shall have effect with the omission of the words from “ and any such proceedings instituted in Northern Ireland ” onwards.

(11) In the application of section 103 of that Act (time limit for recovery) by virtue of this paragraph—

(a) any reference in subsection (1) to tax shall be taken to include a reference to Class 1, Class 1A and Class 1B contributions;

(b) any penalty by virtue of sub-paragraph (4) above shall be regarded as a penalty in respect of the tax return in question; and

(c) where, by virtue of subsection (2) (death), subsection (1)(b) does not apply in relation to a penalty under section 98A(2)(b) or (4) of that Act in respect of a tax return, it shall also not apply in relation to a penalty so imposed in respect of the associated contributions return.

(12) A penalty under section 98A of that Act as it applies by virtue of this paragraph shall not be imposed where—

(a) a decision relating to contributions falls to be made under or by virtue of section 8, 10 or 11 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999, and has not yet been made; and

(b) the decision will affect a person’s liability for the penalty, or the amount of it.

(13) For the purposes of this paragraph—

(a) “contributions return” and “tax return” shall be construed in accordance with sub-paragraph (1) above; and

(b) a contributions return and a tax return are “associated” if the contributions return is required to be made—

(i) at the same time as the tax return, or

(ii) where sub-paragraph (1)(b) above applies, at a time defined by reference to the time for making the tax return.

7A

(1) This paragraph applies where paragraph 7 above applies; and in this paragraph “contributions return” has the same meaning as in that paragraph.

(2) Without prejudice to paragraph 7(2) above or to the other powers of the Inland Revenue to penalise omissions or errors in returns, regulations made by the Treasury may provide for the Inland Revenue to impose penalties in respect of a person who, in making a contributions return, fraudulently or negligently—

(a) fails to provide any information or computation that he is required to provide; or

(b) provides any such information or computation that is incorrect.

(3) Regulations under sub-paragraph (2) above shall—

(a) prescribe the rates of penalty, or provide for how they are to be ascertained;

(b) provide for the penalty to be imposed by the Inland Revenue within six years after the date on which the penalty is incurred;

(d) prescribe the means by which the penalty is to be enforced; and

(e) provide for enabling the Inland Revenue, in their discretion, to mitigate or to remit the penalty, or to stay or to compound any proceedings for it.

Collection of contributions otherwise than through PAYE system

7B

(1) The Treasury may by regulations provide that, in such cases or circumstances as may be prescribed, Class 1, Class 1A, Class 1B or Class 2 contributions shall be paid to the Inland Revenue in a manner different from that in which income tax in relation to which PAYE regulations apply is payable.

(2) Regulations under this paragraph may, in particular—

(a) provide for returns to be made to the Inland Revenue by such date as may be prescribed;

(b) prescribe the form in which returns are to be made, or provide for returns to be made in such form as the Inland Revenue may approve;

(c) prescribe the manner in which contributions are to be paid, or provide for contributions to be paid in such manner as the Inland Revenue may approve;

(d) prescribe the due date for the payment of contributions;

(e) require interest to be paid on contributions that are not paid by the due date, and provide for determining the date from which such interest is to be calculated;

(f) provide for interest to be paid on contributions that fall to be repaid;

(g) provide for determining the date from which interest to be charged or paid pursuant to regulations under paragraph (e) or (f) above is to be calculated;

(h) provide for penalties to be imposed in respect of a person who—

(i) fails to submit, within the time allowed, a return required to be made in accordance with regulations under paragraph (a) above;

(ii) in making such a return, fraudulently or negligently fails to provide any information or computation that he is required to provide;

(iii) in making such a return, fraudulently or negligently provides any incorrect information or computation; or

(iv) fails to pay Class 2 contributions by the due date;

(i) provide for a penalty imposed pursuant to regulations under paragraph (h) above to carry interest from the date on which it becomes payable until payment.

(3) Where—

(a) a decision relating to contributions falls to be made under section 8, 9, 10, 12, 14 or 15 of the Social Security Act 1998; and

(b) the decision will affect a person’s liability for, or the amount of, any interest due in respect of those contributions,

regulations under sub-paragraph (2)(e) above shall not require any such interest to be paid until the decision has been made.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) Regulations under sub-paragraph (2)(h) above shall—

(a) prescribe the rates of penalty, or provide for how they are to be ascertained;

(b) ... provide for the penalty to be imposed by the Inland Revenue—

(i) within six years after the date on which the penalty is incurred; or

(ii) where the amount of the penalty is to be ascertained by reference to the amount of any contributions payable, at any later time within three years after the final determination of the amount of those contributions;

(d) prescribe the means by which the penalty is to be enforced; and

(e) provide for enabling the Inland Revenue, in their discretion, to mitigate or to remit the penalty, or to stay or to compound any proceedings for it.

(5A) Regulations under this paragraph may, in relation to any penalty imposed by such regulations, make provision applying (with or without modifications) any enactment applying for the purposes of income tax that is contained in Part X of the Taxes Management Act 1970 (penalties).

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) Interest or penalties may be charged by virtue of regulations under this paragraph in respect of a period before the coming into force of section 57 of the Social Security Act 1998 but only to the extent that interest or penalties would have been chargeable if the contributions in question had been recoverable, in respect of that period, by virtue of regulations under paragraph 6 above.

(9) Any reference to contributions in sub-paragraph (1) above 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 sub-paragraph (2) above.

(10) The rate of interest applicable for any purpose of this paragraph shall be the rate from time to time prescribed under section 178 of the Finance Act 1989 for the corresponding purpose of paragraph 6 above.

7BZA

(1) The Inland Revenue may by regulations provide for Class 1, Class 1A, Class 1B or Class 2 contributions to which regulations under 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.

(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).

7BA

The Inland Revenue may by regulations provide for amounts in respect of contributions or interest that fall to be paid or repaid in accordance with any regulations under this Schedule to be set off, or to be capable of being set off, in prescribed circumstances and to the prescribed extent, against any such liabilities under regulations under this Schedule of the person entitled to the payment or repayment as may be prescribed.

7BB

(1) Regulations may provide, in connection with maternity allowance under section 35 or 35B, for a person who is, or will be, ... entitled to pay a Class 2 contribution in respect of a week in a tax year to be able to pay a Class 2 contribution in respect of that week at any time in the period—

(a) beginning with that week, and

(b) ending with a prescribed date.

(2) The regulations may provide that where a person pays a Class 2 contribution in respect of a week in a tax year under the regulations—

(a) the contribution is to be treated, before the end of the tax year, as a Class 2 contribution under section 11(6);

(b) the contribution is to be treated, after the end of the tax year—

(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(ii) ...as a Class 2 contribution under section 11(6).

(3) Regulations under this paragraph are to be made by the Treasury acting with the concurrence of the Secretary of State.

General regulation - making powers

8

(1) The appropriate authority may by regulations provide—

(a) for requiring persons to maintain, in such form and manner as may be prescribed, records—

(i) of the earnings paid by them to and in respect of earners, and

(ii) of the contributions paid or payable in respect of earnings so paid,

for the purpose of enabling the incidence of liability for contributions of any class to be determined, and to retain the records for so long as may be prescribed;

(aa) for requiring persons to maintain, in such form and manner as may be prescribed, records of such matters as may be prescribed for purposes connected with the employment allowance provisions (within the meaning of the National Insurance Contributions Act 2014), and to retain the records for so long as may be prescribed;

(b) for requiring persons to maintain, in such form and manner as may be prescribed, records of such matters as may be prescribed for the purpose of enabling the incidence of liability for Class 1A or Class 1B contributions to be determined, and to retain the records for so long as may be prescribed;

(c) for treating primary Class 1 contributions, when payable on the primary contributor’s behalf by the secondary contributor, but not paid, as actually paid where the failure to pay is shown not to have been with the consent or connivance of, or attributable to any negligence on the part of, the primary contributor and, in the case of contributions so treated, for treating them also as paid at a prescribed time or in respect of a prescribed period;

(ca) for requiring a secondary contributor to notify a person to whom any of his liabilities are transferred by an election under paragraph 3B above of—

(i) any transferred liability that arises;

(ii) the amount of any transferred liability that arises; and

(iii) the contents of any notice of withdrawal by the Inland Revenue of any approval that relates to that election;

(d) for treating, for the purpose of any entitlement to benefit, contributions paid at or after any prescribed time as paid at some other time (whether earlier or later) or, in the case of contributions paid after the due date for payment, or at such later date as may be prescribed, as not having been paid;

(e) for enabling contributions to be treated as paid in respect of a tax year earlier or later than that in respect of which they were actually paid;

(f) for treating (for the purposes of Class 2 contributions) a week which falls partly in one, and partly in another, tax year as falling wholly within one or the other of those tax years;

(g) for treating contributions of the wrong class, or at the wrong rate, or of the wrong amount, as paid on account of contributions properly payable (notwithstanding section 14 above, in the case of Class 3 contributions) or as paid (wholly or in part) in discharge of a liability for a contributions equivalent premium;

(h) for the repayment, in prescribed cases, of the whole or a prescribed part of any contributions paid by reference to earnings which have become repayable;

(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(ia) for the repayment, in prescribed cases, of the whole or a prescribed part of a Class 1A or of a Class 1B contribution;

(j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(k) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(l) without prejudice to paragraph (g) above, for enabling—

(i) the whole or part of any payment of secondary Class 1 contributions to be treated as a payment of Class 1A contributions or a Class 1B contribution;

(ii) the whole or part of any payment of Class 1A contributions to be treated as a payment of secondary Class 1 contributions , a Class 1B contribution or Class 2 contributions;

(iia) the whole or part of any payment of a Class 1B contribution to be treated as a payment of secondary Class 1 contributions, Class 1A contributions or Class 2 contributions;

(iii) the whole or part of any payment of Class 2 contributions to be treated as a payment of secondary Class 1 contributions , Class 1A contributions or a Class 1B contribution;

(m) for the return of the whole or any prescribed part of any contributions paid either in error or in such circumstances that, under any provision of Part I of this Act or of regulations, they fall to be repaid;

(n) for treating a person as being an employed earner, notwithstanding that his employment is outside Great Britain;

(o) for treating a person’s employment as continuing during periods of holiday, unemployment or incapacity for work and in such other circumstances as may be prescribed;

(p) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(q) for any other matters incidental to the payment, collection or return of contributions.

(1A) In sub-paragraph (1), “the appropriate authority” means the Treasury, except that, in relation to—

(a) provision made by virtue of paragraph (d) of that sub-paragraph, and

(b) provision made by virtue of paragraph (q) of that sub-paragraph in relation to the matters referred to in paragraph (d),

it means the Secretary of State acting with the concurrence of the Inland Revenue.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

The Treasury may by regulations provide that—

(a) for the purpose of determining whether a contribution is payable in respect of any person, or

(b) for determining the amount or rate of any contribution,

he is to be treated as having attained at the beginning of a week, or as not having attained until the end of a week, any age which he attains during the course of that week.

Deduction of contributions from pension, etc.

10

(1) Where a person is in receipt of a pension or allowance payable by the Secretary of State by virtue of any prescribed enactment or instrument, the Secretary of State may with the consent of that person pay any contributions (other than Class 1 or Class 4 contributions) payable by him and deduct the amount so paid from the pension or allowance.

(2) Sub-paragraph (1) above shall have effect notwithstanding anything in any Act, Royal Warrant, Order in Council, order or scheme.

Sickness payments counting as remuneration

11

(1) The Treasury may by regulations make provision as to the manner in which, and the person through whom, any sickness payment which, by virtue of section 4(1) above, is to be treated as remuneration derived from employed earner’s employment is to be made.

(2) In any case where regulations made under sub-paragraph (1) above have the effect of requiring a registered friendly society (within the meaning of the Friendly Societies Act 1974) to make amendments to its rules, the amendments may, notwithstanding any provision of those rules, be made in accordance with the procedure prescribed by regulations made by the Chief Registrar of Friendly Societies for the purposes of this paragraph.

SCHEDULE 2

Interpretation

1

In this Schedule—

(a) “the Act of 1988” means the Income and Corporation Taxes Act1988;

(ab) “ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005;

(ac) “ITA 2007” means the Income Tax Act 2007;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Method of computing profits or gains

2

Subject to the following paragraphs, Class 4 contributions shall be payable in respect of the full amount of all profits—

(a) which are the profits of any relevant trade, profession or vocation which is not carried on wholly outside the United Kingdom, and

(b) which are chargeable to income tax under Chapter 2 of Part 2 of ITTOIA 2005.

Reliefs

3

(1) For the purposes of computing the amount of profits ... in respect of which Class 4 contributions are payable, relief shall be available under, and in the manner provided by, the following provisions of ITA 2007—

(a) sections 64 and 72 (set-off of trade losses against general income), but only where loss arises from activities the profits ... of which would be brought into computation for the purposes of Class 4 contributions;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d) section 89 (carry-back of terminal losses).

(2) The following relief provisions ... shall not apply, that is to say—

(a) Chapter I of Part VII of the Act of 1988 and Chapters 2 and 3 of Part 3 and sections 457, 458 and 459 of ITA 2007 (personal reliefs);

(b) section 383 of ITA 2007 (relief for payment of interest);

(d) sections 88 and 94 of ITA 2007 (treatment of interest as a loss for purposes of carry-forward or carry-back);

(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...

(f) sections 619 and 620 (premiums or other consideration under annuity contracts and trust schemes); and

(g) section 639 (personal pension contributions).

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Where in the year 1990-1991 or any subsequent year of assessment for which a person claims and is allowed relief by virtue of sub-paragraph (1) above there falls to be made in computing his net income for income tax purposes a deduction in respect of any loss in any relevant trade, profession or vocation—

(a) the amount of the deduction shall, as far as may be, be treated for the purpose of the charge to Class 4 contributions as reducing the person’s profits ... for that year of any relevant trade, profession or vocation, and

(b) any excess shall be treated for that purpose as reducing such profits ... for subsequent years (being deducted as far as may be from those of the immediately following year, whether or not the person claims or is entitled to claim relief under this paragraph for that year, and, so far as it cannot be so deducted, then from those of the next year, and so on).

(5) Relief shall be allowed, in respect of—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) payments under section 383 of ITA 2007 (relief for payment of interest), being payments for which relief from income tax is or can be given,

(i) section 900(2) of ITA 2007 (commercial payments made by individuals),

(ii) section 903(5) of that Act (patent royalties), or

(iii) section 906(5) of that Act (certain royalties etc where usual place of abode of owner is abroad),

(d) so much of any payment from which a sum representing income tax must be deducted under section 910(2) of ITA 2007 (proceeds of a sale of patent rights: payments to non-UK residents) as is equal to the amount referred to in that provision as “the chargeable amount”, or

(e) a payment from which a sum representing income tax must be deducted as a result of a direction under section 944(2) of ITA 2007 (tax avoidance: certain payments to non-UK residents)

so far as the payment is incurred wholly or exclusively for the purposes of any relevant trade, profession or vocation, by way of deduction from or set-off against profits ... chargeable to Class 4 contributions for the year in which the payments are made; and, in the case of any insufficiency of the profits ... of that year, the payments shall be carried forward and deducted from or set off against the profits ... of any subsequent year (being deducted or set off as far as may be from or against the profits ... of the immediately following year, whether or not relief can be claimed under this paragraph for that year, and so far as it cannot be so deducted, from or against those of the next year, and so on).

Partnerships

4

(1) Where a trade or profession is carried on by two or more persons jointly, the liability of any one of them in respect of Class 4 contributions shall arise in respect of his share of the profits ... of that trade or profession (so far as immediately derived by him from carrying it on); and for this purpose his share shall be aggregated with his share of the profits ... of any other trade, profession or vocation (so far as immediately derived by him from carrying it on or exercising it).

(2) Where sub-paragraph (1) above applies, the Class 4 contributions for which a person is liable in respect of the profits ... of the trade or profession carried on jointly (aggregated, where appropriate, as mentioned in that sub-paragraph) shall be charged on him separately.

Trustees, etc.

5

In any circumstances in which apart from this paragraph a person would—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) by virtue of section 8 of ITTOIA 2005 be assessed and charged to Class 4 contributions in respect of profits ... received or receivable by him in the capacity of trustee,

such contributions shall not be payable either by him or by any other person.

Other provisions

6

(1) Section 101 of the Finance Act 2009 (late payment interest on sums due to HMRC) shall apply in relation to any amount due in respect of Class 4 contributions as it applies in relation to income tax; and section 102 of the Finance Act 2009 (repayment interest on sums to be paid by HMRC) shall, with the necessary modifications, apply in relation to Class 4 contributions as it applies in relation to income tax.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

Where an assessment has become final and conclusive for the purposes of income tax for any year, that assessment shall also be final and conclusive for the purposes of computing liability for Class 4 contributions; and no allowance or adjustment of liability, on the ground of diminution of income or loss, shall be taken into account in computing profits ... chargeable to Class 4 contributions unless that allowance or adjustment has previously been made on an application under the special provisions of the Income Tax Acts relating to it, or falls to be allowed under paragraph 3(5) of this Schedule.

8

The provisions of Part V of the Taxes Management Act 1970 (appeals, etc.) shall apply with the necessary modifications in relation to Class 4 contributions as they apply in relation to income tax; but nothing in this Schedule affects the extent to which the Income Tax Acts apply with respect to any decision falling to be made—

(a) under subsection (1) of section 17 above or subsection (1) of section 17 of the Northern Ireland Contributions and Benefits Act as to whether by regulations under that subsection a person is excepted from liability for Class 4 contributions, or his liability is deferred; or

(b) under regulations made by virtue of section 17(3) or (4) or 18 above or section 17(3) or (4) or 18 of the Northern Ireland Contributions and Benefits Act.

...

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 3

Part I — The conditions

Unemployment benefit

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Short-term incapacity benefit

2

(1) The contribution conditions for short-term incapacity benefit are the following.

(2) The first condition is that—

(a) the claimant must have actually paid contributions of a relevant class in respect of one of the last three complete years before the beginning of the relevant benefit year, and those contributions must have been paid before the relevant time; and

(b) the earnings factor derived as mentioned in sub-paragraph (4) below must be not less than that year’s lower earnings limit multiplied by 25.

(3) The second condition is that—

(a) the claimant must in respect of the last two complete years before the beginning of the relevant benefit year have either paid or been credited with contributions of a relevant class or been credited (in the case of 1987-88 or any subsequent year) with earnings; and

(b) the earnings factor derived as mentioned in sub-paragraph (5) below must be not less in each of those years than the year’s lower earnings limit multiplied by 50.

(4) The earnings factor referred to in paragraph (b) of sub-paragraph (2) above is that which is derived—

(a) if the year in question is 1987-88 or any subsequent year—

(i) from so much of the claimant’s earnings as did not exceed the upper earnings limit and upon which primary Class 1 contributions have been paid or treated as paid; or

(ii) from Class 2 contributions; and

(b) if the year in question is an earlier year, from the contributions paid as mentioned in paragraph (a) of that sub-paragraph.

(5) The earnings factor referred to in paragraph (b) of sub-paragraph (3) above is that which is derived—

(a) if the year in question is 1987-88 or any subsequent year—

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