National Insurance Contributions and Statutory Payments Act 2004

Payment of Class 1 contributions

Payment of Class 1 contributions: Great Britain

1

• (1) Paragraph 3 of Schedule 1 to the Social Security Contributions and Benefits Act 1992 (c. 4) (method of paying Class 1 contributions) is amended as follows.

• (2) In sub-paragraph (3) (deduction of contributions from earnings) for “sub-paragraph (4)” substitute “ sub-paragraphs (3A) to (5) ”.

• (3) After that sub-paragraph insert—

(3A) Sub-paragraph (3B) applies where a person (“the employee”) who is employed by a particular employer (“the employer”) receives earnings in a form other than money (“non-monetary earnings”) 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) In sub-paragraph (4) (contributions in respect of ex-employees), in paragraph (b) for “earnings” to the end substitute “ or in the next tax year non-monetary earnings. ”

• (5) In sub-paragraph (5) (recovery of contributions in a case where sub-paragraph (4) applies) omit from “or” at the end of paragraph (a) to the end.

Payment of Class 1 contributions: Northern Ireland

2

• (1) Paragraph 3 of Schedule 1 to the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7) (method of paying Class 1 contributions) is amended as follows.

• (2) In sub-paragraph (3) (deduction of contributions from earnings) for “sub-paragraph (4)” substitute “ sub-paragraphs (3A) to (5) ”.

• (3) After that sub-paragraph insert—

(3A) Sub-paragraph (3B) applies where a person (“the employee”) who is employed by a particular employer (“the employer”) receives earnings in a form other than money (“non-monetary earnings”) 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) In sub-paragraph (4) (contributions in respect of ex-employees), in paragraph (b) for “earnings” to the end substitute “ or in the next tax year non-monetary earnings. ”

• (5) In sub-paragraph (5) (recovery of contributions in a case where sub-paragraph (4) applies) omit from “or” at the end of paragraph (a) to the end.

Agreements and joint elections: Great Britain

3

• (1) Schedule 1 to the Social Security Contributions and Benefits Act 1992 (c. 4) (supplementary provisions relating to Class 1 contributions) is amended as follows.

• (2) In paragraph 3A (restrictions on recovery of employer’s contributions)—

• (a) in sub-paragraph (2) for “a gain” to the end substitute “ relevant employment income of that earner. ”, and

• (b) after that sub-paragraph insert—

(2A) But an agreement in respect of relevant employment income is to be disregarded for the purposes of sub-paragraph (2) to the extent that it relates to relevant employment income which is employment income of the earner by virtue of Chapter 3A of Part 7 of ITEPA 2003 (employment income: securities with artificially depressed market value). (2B) For the purposes of sub-paragraphs (2) and (2A) “relevant 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 (c) a gain that is treated as remuneration derived from the earner’s employment by virtue of section 4(4)(a) above.

• (3) In paragraph 3B (transfer of liability to be borne by the earner)—

• (a) in sub-paragraph (1), in paragraph (a)—

• (i) for “share option gains by the earner” substitute “ relevant employment income of the earner ”, and

• (ii) for “such gains” substitute “ such income ”,

• (b) after that sub-paragraph insert—

(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 (c) a gain that is treated as remuneration derived from the earner’s employment by virtue of section 4(4)(a) above, and references to contributions on relevant employment income are references to any secondary Class 1 contributions payable in respect of that income.

,

• (c) in sub-paragraph (2)(b) for “share option gains by the earner, or the part of them” substitute “ relevant employment income of the earner, or the part of it ”,

• (d) in sub-paragraph (3) for “sub-paragraph (7)(b)” substitute “ sub-paragraphs (7)(b) and (7B) ”,

• (e) in sub-paragraph (7)(b) for “on share option” to the end substitute

on relevant employment income if— (i) that income is within sub-paragraph (1A)(a) or (b) and the securities, or interest in 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.

,

• (f) after sub-paragraph (7) insert—

(7A) In sub-paragraph (7)(b) “the withdrawal date” means— (a) the date on which notice of the withdrawal of the approval is given, or (b) such later date as the Inland Revenue may specify in that notice. (7B) An election is void for the purposes of sub-paragraph (1) to the extent that it relates to relevant employment income which is employment income of the earner by virtue of Chapter 3A of Part 7 of ITEPA 2003 (employment income: securities with artificially depressed market value).

,

• (g) for sub-paragraph (10) substitute—

(10) Subject to sub-paragraph (12) below, an election under sub-paragraph (1) above shall not apply to any contributions in respect of income which, before the election was made, counted as employment income for a tax year by virtue of Part 7 of ITEPA 2003.

, and

• (h) omit sub-paragraph (13).

• (4) The amendments made by this section have effect in relation to—

• (a) agreements entered into after the date of commencement of this section which are in respect of post-commencement employment income, and

• (b) elections made after that date.

• (5) For the purposes of subsection (4), “post-commencement employment income” means income which is relevant employment income within paragraph 3A(2B) of Schedule 1 to the Social Security Contributions and Benefits Act 1992 (c. 4) which, after the date of commencement of this section, counts as employment income for a tax year by virtue of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1).

Agreements and joint elections: Northern Ireland

4

• (1) Schedule 1 to the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7) (supplementary provisions relating to Class 1 contributions) is amended as follows.

• (2) In paragraph 3A (restrictions on recovery of employer’s contributions)—

• (a) in sub-paragraph (2) for “a gain” to the end substitute “ relevant employment income of that earner. ”, and

• (b) after that sub-paragraph insert—

(2A) But an agreement in respect of relevant employment income is to be disregarded for the purposes of sub-paragraph (2) to the extent that it relates to relevant employment income which is employment income of the earner by virtue of Chapter 3A of Part 7 of ITEPA 2003 (employment income: securities with artificially depressed market value). (2B) For the purposes of sub-paragraphs (2) and (2A) “relevant employment income”, in relation to the earner, means— (a) an amount that counts as employment income of the 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 (c) a gain that is treated as remuneration derived from the earner’s employment by virtue of section 4(4)(a) above.

• (3) In paragraph 3B (transfer of liability to be borne by the earner)—

• (a) in sub-paragraph (1), in paragraph (a)—

• (i) for “share option gains by the earner” substitute “ relevant employment income of the earner ”, and

• (ii) for “such gains” substitute “ such income ”,

• (b) after that sub-paragraph insert—

(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 (c) a gain that is treated as remuneration derived from the earner’s employment by virtue of section 4(4)(a) above, and references to contributions on relevant employment income are references to any secondary Class 1 contributions payable in respect of that income.

,

• (c) in sub-paragraph (2)(b) for “share option gains by the earner, or the part of them” substitute “ relevant employment income of the earner, or the part of it ”,

• (d) in sub-paragraph (3) for “sub-paragraph (7)(b)” substitute “ sub-paragraphs (7)(b) and (7B) ”,

• (e) in sub-paragraph (7)(b) for “on share option” to the end substitute

on relevant employment income if— (i) that income is within sub-paragraph (1A)(a) or (b) and the securities, or interest in 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.

,

• (f) after sub-paragraph (7) insert—

(7A) In sub-paragraph (7)(b) “the withdrawal date” means— (a) the date on which notice of the withdrawal of the approval is given, or (b) such later date as the Inland Revenue may specify in that notice. (7B) An election is void for the purposes of sub-paragraph (1) to the extent that it relates to relevant employment income which is employment income of the earner by virtue of Chapter 3A of Part 7 of ITEPA 2003 (employment income: securities with artificially depressed market value).

,

• (g) for sub-paragraph (10) substitute—

(10) Subject to sub-paragraph (12) below, an election under sub-paragraph (1) above shall not apply to any contributions in respect of income which, before the election was made, counted as employment income for a tax year by virtue of Part 7 of ITEPA 2003.

, and

• (h) omit sub-paragraph (13).

• (4) The amendments made by this section have effect in relation to—

• (a) agreements entered into after the date of commencement of this section which are in respect of post-commencement employment income, and

• (b) elections made after that date.

• (5) For the purposes of subsection (4), “post-commencement employment income” means income which is relevant employment income within paragraph 3A(2B) of Schedule 1 to the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7) which, after the date of commencement of this section, counts as employment income for a tax year by virtue of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1).

Method of recovery of contributions etc

Recovery of contributions, etc: Great Britain

5

• (1) In section 121A(1)(b) of the Social Security Administration Act 1992 (c. 5) (time limit for compliance with certificate of non-payment of contributions, etc in England and Wales), for “30 days” substitute “ 7 days ”.

• (2) In section 121B(1) of that Act (time limit for compliance with certificate of non-payment of contributions, etc in Scotland), for “30 days” substitute “ 14 days ”.

• (3) In section 121C of that Act (liability of directors etc for company’s contributions), after subsection (8) insert—

(8A) The amount which an officer is liable to pay under this section is to be recovered in the same manner as a Class 1 contribution to which regulations under paragraph 6 of Schedule 1 to the Contributions and Benefits Act apply and for this purpose references in those regulations to Class 1 contributions are to be construed accordingly.

• (4) After paragraph 7B of Schedule 1 to the Social Security Contributions and Benefits Act 1992 (c. 4) (collection of contributions otherwise than through PAYE system) insert—

(7BZA) (1) The Inland Revenue may by regulations provide for Class 1, Class 1A, Class 1B or Class 2 contributions to which regulations under 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).

Recovery of contributions, etc: Northern Ireland

6

• (1) For section 115A of the Social Security Administration (Northern Ireland) Act 1992 (c. 8) (recovery of contributions, etc) substitute—

(115A) (1) If— (a) a person is served at any time with a copy of a certificate under section 112(1), and (b) he neglects or refuses to pay the contributions, interest or penalty to which the certificate relates within 7 days of that time, an authorised officer may distrain upon the goods and chattels of that person (“the person in default”). (2) For the purpose of levying any such distress, a justice of the peace, on being satisfied by a complaint on oath that there is reasonable ground for believing that the conditions in subsection (1) are fulfilled, may issue a warrant in writing authorising the authorised officer to enter in the daytime, by force if necessary, any premises to which this section applies, calling on the assistance of any constable. (3) Every such constable shall, when so required, assist the authorised officer in the execution of the warrant and in levying the distress in the premises. (4) A warrant to enter premises by force shall be executed by the authorised officer, or under his direction and in his presence. (5) A distress levied by the authorised officer shall be kept for 5 days, and any costs or charges shall be borne by the person in default. (6) If the person in default does not pay the sum due, together with the costs and charges, the distress shall be appraised by one or more independent persons appointed by the authorised officer, and shall be sold by public auction by the authorised officer for payment of the sum due and all costs and charges. (7) Any surplus arising from the distress, after the deduction of the costs and charges and of the sum due, shall be paid to the owner of the goods distrained. (8) Regulations made by the Inland Revenue may make provision with respect to— (a) the fees chargeable on or in connection with the levying of distress; and (b) the costs and charges recoverable where distress has been levied. (9) In this section “authorised officer” means an officer of the Inland Revenue authorised by them for the purposes of this section. (10) The premises to which this section applies are premises where an authorised officer has reasonable grounds for believing that— (a) any persons are employed, or (b) a trade or business is being carried on; but this section does not apply to a private dwelling-house unless an authorised officer has reasonable grounds for believing that a trade or business is being carried on from the dwelling-house and that the trade or business is not also being carried on from premises other than a dwelling-house.

• (2) In section 115B of that Act (liability of directors etc for company’s contributions), after subsection (8) insert—

(8A) The amount which an officer is liable to pay under this section is to be recovered in the same manner as a Class 1 contribution to which regulations under paragraph 6 of Schedule 1 to the Contributions and Benefits Act apply and for this purpose references in those regulations to Class 1 contributions are to be construed accordingly.

• (3) After paragraph 7B of Schedule 1 to the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7) (collection of contributions otherwise than through PAYE system) insert—

(7BZA) (1) The Inland Revenue may by regulations provide for Class 1, Class 1A, Class 1B or Class 2 contributions to which regulations under 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).

Provision of information

Class 1, 1A, 1B or 2 contributions: powers to call for documents etc: Great Britain

7

For section 110ZA of the Social Security Administration Act 1992 (c. 5) (powers exercisable by officers of Inland Revenue) substitute—