Social Security Contributions and Benefits (Northern Ireland) Act 1992

Part I — Contributions

Preliminary

Category B retirement pension: general.

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• (1) The funds required—

• (a) for paying such benefits under this Act or any other Act or Northern Ireland legislation as are payable out of the National Insurance Fund and not out of other public money; and

• (b) for the making of payments under section 142 of the Administration Act towards the cost of the health service,

shall be provided by means of contributions payable to the Inland Revenue by earners, employers and others, together with the additions under subsection (5) below and amounts payable under Article 4 of the Social Security (Northern Ireland) Order 1993.

• (2) Contributions under this Part of this Act shall be of the following ... classes—

• (a) Class 1, earnings-related, payable under section 6 below, being—

• (i) primary Class 1 contributions from employed earners; and

• (ii) secondary Class 1 contributions from employers and other persons paying earnings;

• (b) Class 1A, payable under section 10 below ... by persons liable to pay secondary Class 1 contributions and certain other persons;

• (bb) Class 1B, payable under section 10A below by persons who are accountable to the Inland Revenue in respect of income tax on general earnings in accordance with a PAYE settlement agreement;

• (c) Class 2, flat-rate, payable ... under section 11 below by self-employed earners;

• (d) Class 3, payable under section 13 or 13A below by earners and others voluntarily with a view to providing entitlement to benefit, or making up entitlement;

• (da) Class 3A, payable by eligible people voluntarily under section 14A with a view to obtaining units of additional pension; and

• (e) Class 4, payable under section 15 below in respect of the profits or gains of a trade, profession or vocation, or under section 18 below in respect of equivalent earnings.

• (3) The amounts and rates of contributions in this Part of this Act and the other figures in it which affect the liability of contributors shall—

• (a) be subject to regulations under sections 19(4) and 116 to 119 below; and

• (b) to the extent provided for by section 129 of the Administration Act be subject to alteration by orders made under that section,

...

• (4) Schedule 1 to this Act—

• (a) shall have effect with respect to the computation, collection and recovery of contributions of Classes 1, 1A, 1B, 2 , 3 and 3A, and otherwise with respect to contributions of those classes; and

• (b) shall also, to the extent provided by regulations made under section 18 below, have effect with respect to the computation, collection and recovery of Class 4 contributions, and otherwise with respect to such contributions, ...

• (5) For each financial year there shall, by way of addition to contributions, be paid out of money hereafter appropriated for that purpose, in such manner and at such times as the Department of Finance and Personnel may determine, amounts the total of which for any such year is equal to the aggregate of all statutory sick pay , statutory maternity pay, statutory paternity pay, statutory adoption pay , statutory shared parental pay and statutory parental bereavement pay recovered by employers and others in that year, as estimated by the Department.

• (6) No person shall—

• (a) be liable to pay Class 1, Class 1A , Class 1B or Class 2 contributions unless he fulfils prescribed conditions as to residence or presence in Northern Ireland;

• (aa) be treated under section 11(5B) as having actually paid Class 2 contributions unless he fulfils such conditions;

• (b) be entitled to pay Class 3 contributions unless he fulfils such conditions; or

• (c) be entitled to pay Class 1, Class 1A , Class 1B or Class 2 contributions other than those which he is liable to pay, except so far as he is permitted by regulations to pay them.

• (7) Regulations under subsection (6) above shall be made by the Treasury.

Categories of earners

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• (1) In this Part of this Act and Parts II to V—

• (a) “employed earner” means a person who is gainfully employed in Northern Ireland either under a contract of service, or in an office (including elective office) with ... earnings; and

• (b) “self-employed earner” means a person who is gainfully employed in Northern Ireland otherwise than in employed earner’s employment (whether or not he is also employed in such employment).

• (2) Regulations may provide—

• (a) for employment of any prescribed description to be disregarded in relation to liability for contributions otherwise arising from employment of that description;

• (b) for a person in employment of any prescribed description to be treated, for the purposes of this Act, as falling within one or other of the categories of earner defined in subsection (1) above, notwithstanding that he would not fall within that category apart from the regulations.

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

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

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

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

• (2A) Regulations under subsection (2) above shall be made by the Treasury and, in the case of regulations under paragraph (b) of that subsection, with the concurrence of the Department.

• (3) Where a person is to be treated by reference to any employment of his as an employed earner, then he is to be so treated for all purposes of this Act; and references throughout this Act to employed earner’s employment shall be construed accordingly.

• (4) Subsections (1) to (3) above are subject to the provision made by section 95 below as to the employments which are to be treated, for the purposes of industrial injuries benefit, as employed earner’s employments.

• (5) For the purposes of this Act, a person shall be treated as a self-employed earner as respects any week during any part of which he is such an earner (without prejudice to his being also treated as an employed earner as respects that week by reference to any other employment of his).

“Earnings” and “earner”

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• (1) In this Part of this Act and Parts II to V—

• (a) “earnings” includes any remuneration or profit derived from an employment; and

• (b) “earner” shall be construed accordingly.

• (2) For the purposes of this Part of this Act and of Parts II to V ... —

• (a) the amount of a person’s earnings for any period; or

• (b) the amount of his earnings to be treated as comprised in any payment made to him or for his benefit,

shall be calculated or estimated in such manner and on such basis as may be prescribed by regulations made by the Treasury with the concurrence of the Department.

• (2A) Regulations made for the purposes of subsection (2) above may provide that, where a payment is made or a benefit provided to or for the benefit of two or more earners, a proportion (determined in such manner as may be prescribed) of the amount or value of the payment or benefit shall be attributed to each earner.

• (3) Regulations made for the purposes of subsection (2) above may prescribe that payments of a particular class or description made or falling to be made to or by a person shall, to such extent as may be prescribed, be disregarded or, as the case may be, be deducted from the amount of that person’s earnings.

• (4) Subsection (5) below applies to regulations made for the purposes of subsection (2) above which make special provision with respect to the earnings periods of directors and former directors of companies.

• (5) Regulations to which this subsection applies may make provision—

• (a) for enabling companies, and directors and former directors of companies, to pay on account of any earnings-related contributions that may become payable by them such amounts as would be payable by way of such contributions if the special provision had not been made; and

• (b) for requiring any payments made in accordance with the regulations to be treated, for prescribed purposes, as if they were the contributions on account of which they were made.

Payments treated as remuneration and earnings

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• (1) For the purposes of section 3 above there shall be treated as remuneration derived from employed earner’s employment—

• (a) any sum paid to or for the benefit of a person in satisfaction (whether in whole or in part) of any entitlement of that person to—

• (i) statutory sick pay; or

• (ii) statutory maternity pay; or

• (iii) statutory paternity pay; or

• (iv) statutory adoption pay; or

• (v) statutory shared parental pay; ... or

• (vi) statutory parental bereavement pay; and

• (b) any sickness payment made—

• (i) to or for the benefit of the employed earner; and

• (ii) in accordance with arrangements under which the person who is the secondary contributor in relation to the employment concerned has made, or remains liable to make, payments towards the provision of that sickness payment.

• (2) Where the funds for making sickness payments under arrangements of the kind mentioned in paragraph (b) of subsection (1) above are attributable in part to contributions to those funds made by the employed earner, regulations may make provision for disregarding, for the purposes of that subsection, the prescribed part of any sum paid as a result of the arrangements.

• (3) For the purposes of subsections (1) and (2) above “sickness payment” means any payment made in respect of absence from work due to incapacity for work . . ..

• (4) For the purposes of section 3 above there shall be treated as remuneration derived from an employed earner’s employment—

• (a) the amount of any gain calculated under section 479 of ITEPA 2003 in respect of which an amount counts as employment income of the earner under section 476 of that Act (charge on acquisition of securities pursuant to option etc), reduced by any amounts deducted under section 480(1) to (6) of that Act in arriving at the amount counting as such employment income;

• (b) any sum paid (or treated as paid) to or for the benefit of the earner which is chargeable to tax by virtue of section 225 or 226 of ITEPA 2003 (taxation of consideration for certain restrictive undertakings).

• (5) For the purposes of section 3 above regulations may make provision for treating as remuneration derived from an employed earner’s employment any payment made by a body corporate to or for the benefit of any of its directors where that payment would, when made, not be earnings for the purposes of this Act.

• (6) Regulations may make provision for the purposes of this Part—

• (a) for treating any amount on which an employed earner is chargeable to income tax under the employment income Parts of ITEPA 2003 as remuneration derived from the earner’s employment; and

• (b) for treating any amount which in accordance with regulations under paragraph (a) above constitutes remuneration as an amount of remuneration paid, at such time as may be determined in accordance with the regulations, to or for the benefit of the earner in respect of his employment.

• (7) Regulations under this section shall be made by the Treasury with the concurrence of the Department.

Class 1 contributions

Earnings limits for Class 1 contributions

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• (1) For the purposes of this Act there shall for every tax year be—

• (a) the following for primary Class 1 contributions—

• (i) a lower earnings limit,

• (ii) a primary threshold, and

• (iii) an upper earnings limit; and

• (b) a secondary threshold for secondary Class 1 contributions.

Those limits and thresholds shall be the amounts specified for that year by regulations ...

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

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

• (4) Regulations may, in the case of each of the limits or thresholds mentioned in subsection (1) above, prescribe an equivalent of that limit or threshold in relation to earners paid otherwise than weekly (and references in this Act or any other statutory provision to “the prescribed equivalent”, in the context of any of those limits or thresholds, are accordingly references to the equivalent prescribed under this subsection in relation to such earners).

• (5) The power conferred by subsection (4) above to prescribe an equivalent of any of those limits or thresholds includes power to prescribe an amount which exceeds, by not more than £1.00, the amount which is the arithmetical equivalent of that limit or threshold.

• (6) Regulations under this section shall be made by the Treasury.

Liability for Class 1 contributions

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• (1) Where in any tax week earnings are paid to or for the benefit of an earner over the age of 16 in respect of any one employment of his which is employed earner’s employment—

• (a) a primary Class 1 contribution shall be payable in accordance with this section and section 8 below if the amount paid exceeds the current primary threshold (or the prescribed equivalent); and

• (b) a secondary Class 1 contribution shall be payable in accordance with this section and section 9 below if the amount paid exceeds the current secondary threshold (or the prescribed equivalent).

• (2) No primary or secondary Class 1 contribution shall be payable in respect of earnings if a Class 1B contribution is payable in respect of them.

• (3) Except as may be prescribed, no primary Class 1 contribution shall be payable in respect of earnings paid to or for the benefit of an employed earner after he attains pensionable age, but without prejudice to any liability to pay secondary Class 1 contributions in respect of any such earnings.

• (4) The primary and secondary Class 1 contributions referred to in subsection (1) above are payable as follows—

• (a) the primary contribution shall be the liability of the earner; and

• (b) the secondary contribution shall be the liability of the secondary contributor;

but nothing in this subsection shall prejudice the provisions of paragraphs 3 to 3B of Schedule 1 to this Act.

• (5) Except as provided by this Act, the primary and secondary Class 1 contributions in respect of earnings paid to or for the benefit of an earner in respect of any one employment of his shall be payable without regard to any other such payment of earnings in respect of any other employment of his.

• (6) Regulations may provide for reducing primary or secondary Class 1 contributions which are payable in respect of persons to whom Part XII of the Employment Rights (Northern Ireland) Order 1996 (redundancy payments) does not apply by virtue of Article 242(2) or 250 of that Order.

• (7) Regulations under this section shall be made by the Treasury.

“Secondary contributor”

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• (1) For the purposes of this Act, the “secondary contributor” in relation to any payment of earnings to or for the benefit of an employed earner, is—

• (a) in the case of an earner employed under a contract of service, his employer;

• (b) in the case of an earner employed in an office with ... earnings, either—

• (i) such person as may be prescribed in relation to that office; or

• (ii) if no person is prescribed, the government department, public authority or body of persons responsible for paying the ... earnings of the office;

but this subsection is subject to subsection (2) below.

• (2) In relation to employed earners who—

• (a) are paid earnings in a tax week by more than one person in respect of different employments; or

• (b) work under the general control or management of a person other than their immediate employer,

and in relation to any other case for which it appears to the Treasury that such provision is needed, regulations may provide that the prescribed person is to be treated as the secondary contributor in respect of earnings paid to or for the benefit of an earner.

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

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

• (3) Regulations under any provision of this section shall be made by the Treasury.

Calculation of primary Class 1 contributions

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• (1) Where a primary Class 1 contribution is payable as mentioned in section 6(1)(a) above, the amount of that contribution is the aggregate of—

• (a) the main primary percentage of so much of the earner’s earnings paid in the tax week, in respect of the employment in question, as—

• (i) exceeds the current primary threshold (or the prescribed equivalent); but

• (ii) does not exceed the current upper earnings limit (or the prescribed equivalent); and

• (b) the additional primary percentage of so much of those earnings as exceeds the current upper earnings limit (or the prescribed equivalent).

• (2) For the purposes of this Act—

• (a) the main primary percentage is 8%; and

• (b) the additional primary percentage is 2 per cent;

but the main primary percentage is subject to alteration under section 129 of the Administration Act.