Overview

This bill makes several changes to National Insurance Contributions (NICs) in the UK. Key changes include the introduction of an employment allowance, age-related secondary NICs percentages, and adjustments to how NICs are applied to partnerships and limited liability partnerships. The bill also incorporates NICs into the General Anti-Abuse Rule and clarifies rules for oil and gas workers on the continental shelf.

Description

Employment Allowance

A £2,000 employment allowance is introduced for secondary Class 1 NICs. This allowance reduces the employer's NIC liability, but there are exceptions for public authorities (excluding charities), liabilities related to personal/household employment, workers supplied by service companies, and businesses recently transferred. Connected companies or charities can only claim one allowance between them.

Age-Related Secondary Percentage

A reduced secondary Class 1 NIC rate is introduced for younger earners (under 21). The Treasury can adjust this rate and introduce upper secondary thresholds via regulations.

General Anti-Abuse Rule (GAAR)

The bill brings NICs under the GAAR, allowing HMRC to challenge arrangements designed to avoid NIC liabilities. This includes adjustments to counter tax advantages and provisions for claims and repayments.

Oil and Gas Workers

Clarifications and additional regulatory powers are granted regarding secondary contributors' liabilities for oil and gas workers on the continental shelf.

Partnerships and LLPs

The Treasury is granted power to adjust the calculation of Class 4 NICs for partners in firms (including LLPs) to reflect changes in income tax legislation. Further, regulations can be made to treat members of LLPs as employed earners under certain conditions, clarifying their NIC responsibilities.

Other Provisions

The bill makes several further amendments including: retrospectively disregarding certain Armed Forces early departure payments for NIC purposes; removing redundant reliefs on Class 4 NICs; and making consequential amendments to several related Acts and regulations concerning Northern Ireland.

Government Spending

The employment allowance will reduce government revenue from NICs. The exact figure is dependent upon the number of employers claiming the allowance. The age-related secondary percentage changes may increase or decrease government NIC revenue depending on overall employment changes.

Groups Affected

• Employers: Potentially reduced NIC liabilities through the employment allowance. May face increased record-keeping requirements.
• Employees (under 21): Reduced secondary NIC rate.
• Partnerships and LLPs: Changes to Class 4 NIC liabilities.
• Oil and Gas Workers on the Continental Shelf: Clarified NIC liabilities and procedures.
• HMRC: Increased administrative burden for processing claims and enforcing new rules.

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