Overview

This bill sets limits on National Insurance contribution rates and the upper earnings limit for Class 1 contributions. These limits will apply for tax years beginning after the bill becomes law but before the next general election.

Description

The bill establishes maximum percentages for various components of Class 1 National Insurance contributions.

• Main Primary Percentage: This cannot exceed 12%.
• Additional Primary Percentage: This cannot exceed 2%.
• Secondary Percentage: This cannot exceed 13.8%.
• Upper Earnings Limit: This will be capped at the weekly equivalent of the proposed higher income tax rate threshold, as defined in the government's pre-budget proposals.

These limits apply to tax years starting after the bill's enactment, but before the next general election. The bill defines "main primary percentage," "additional primary percentage," and "secondary percentage" using existing legislation (SSCBA 1992 and SSCB(NI)A 1992).

Government Spending

The bill doesn't directly specify government spending changes. However, by limiting National Insurance contribution rates, it indirectly impacts government revenue from National Insurance. The exact effect on government spending will depend on the actual contribution rates set within the limits defined by this bill.

Groups Affected

The bill affects:

• Employers: They will pay secondary Class 1 contributions, subject to the new upper limit.
• Employees: They will pay primary Class 1 contributions, subject to the new upper and additional limits.
• The Treasury: Government revenue from National Insurance will be affected by the new limits on contribution rates.

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