Overview

The National Insurance Contributions Bill makes several changes to the UK's national insurance system. Key changes include introducing an employment allowance, adjusting secondary contributions based on age, applying a general anti-abuse rule, and clarifying rules for various worker categories, such as those in partnerships and in the oil and gas industry on the continental shelf.

Description

This bill introduces several key changes:

Employment Allowance

A £2,000 employment allowance is introduced for secondary Class 1 National Insurance contributions. This allowance is subject to exceptions for public authorities (excluding charities), those employing family members, those using service companies, and businesses undergoing transfers. Connected companies or charities can only claim one allowance between them. The allowance can be received through deductions from payments or a repayment.

Age-Related Secondary Percentage

The bill introduces age-related secondary Class 1 National Insurance contribution percentages. Lower rates will apply to younger earners (under 21). The Treasury can adjust these percentages and thresholds through regulations.

General Anti-Abuse Rule (GAAR)

The GAAR will apply to National Insurance contributions, preventing avoidance schemes that aim to benefit from the new allowance or other provisions. The Treasury can adjust the application of GAAR through regulations.

Oil and Gas Workers on the Continental Shelf

Clarification is made regarding secondary contributors for oil and gas workers on the continental shelf. The Treasury can issue certificates to confirm liabilities are met, potentially relieving certain contributors from payment responsibility under specific conditions.

Partnerships and Limited Liability Partnerships

The bill allows for modifications to the calculation of Class 4 contributions for partners in firms, including limited liability partnerships. It also gives the Treasury power to define when members of limited liability partnerships should be considered employed earners for National Insurance purposes.

Other Provisions

The bill makes changes to definitions of employed earners, retrospectively disregards certain Armed Forces early departure payments, repeals redundant reliefs related to Class 4 contributions, and makes administrative adjustments for Northern Ireland.

Government Spending

The introduction of the employment allowance will likely reduce government revenue from National Insurance contributions. The extent of the reduction will depend on the number of businesses claiming the allowance. The age-related reduction in secondary contributions might also lead to lower government revenue, although this is partially offset by the potential for higher earnings from employment as a result.

Groups Affected

• Employers: May benefit from the employment allowance, potentially reducing National Insurance costs. Record-keeping requirements will increase.
• Employees under 21: Will see a lower rate of secondary National Insurance contributions.
• Public Authorities: Will generally not be eligible for the employment allowance, except for charities.
• Partnerships and LLPs: Will face potentially altered rules for Class 4 National Insurance contributions.
• Oil and gas workers on the continental shelf: May experience changes to how secondary contributions are handled.
• HMRC: Will have increased administrative responsibilities in managing the employment allowance and dealing with GAAR applications.

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