Overview

This bill sets limits on National Insurance contributions (NICs) rates and the upper earnings limit for Class 1 NICs. These limits will apply for a limited time, until the next general election.

Description

The bill introduces upper limits for several key components of Class 1 National Insurance contributions. These limits apply only until the next general election.

• Main Primary Percentage: This percentage, which forms a major part of NICs, cannot exceed 12%.
• Additional Primary Percentage: An additional percentage added to the main percentage, it is capped at a maximum of 2%.
• Secondary Percentage: The percentage paid by employers, this is limited to a maximum of 13.8%.
• Upper Earnings Limit: The earnings above which NICs are not paid. This limit cannot exceed the weekly equivalent of the proposed higher-rate income tax threshold.

The bill defines these percentages and the upper earnings limit according to existing legislation (Social Security Contributions and Benefits Act 1992 and Social Security Contributions and Benefits (Northern Ireland) Act 1992).

Government Spending

The bill doesn't directly specify government spending. The effect on government revenue from National Insurance contributions will depend on the actual rates set within the limits imposed by this bill. It is likely to result in a reduction in NIC revenue compared to what might otherwise have been collected without these rate ceilings.

Groups Affected

The bill affects various groups:

• Employees: May see lower NIC deductions from their earnings if the actual rates are set below the maximum levels allowed under this bill.
• Employers: Could experience lower NIC liabilities if the secondary percentage is set below its maximum.
• Government: Will likely see a decrease in the amount of NIC revenue received.
• Self-employed individuals: Will be affected by changes to the main and additional primary percentages.

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