Overview

This bill amends the National Insurance Contributions rules to clarify the liability for Class 1A contributions on termination awards and sporting testimonials. It ensures that these payments are subject to the correct National Insurance contributions, clarifying who is responsible for paying them.

Description

The bill makes changes to the Social Security Contributions and Benefits Act 1992 and the Income Tax (Earnings and Pensions) Act 2003. It addresses two main areas:

Termination Awards

The bill introduces a new Class 1A National Insurance contribution on termination awards that are also taxable as employment income under existing legislation. This contribution will be paid by the employer who would normally pay secondary Class 1 contributions if the payment were regular earnings. The bill explicitly clarifies that no Class 1A contribution is payable if Class 1 contributions are already due on that amount, or if the employment terminated was not considered employed earner’s employment.

Sporting Testimonials

Currently, the liability for Class 1A National Insurance contributions on sporting testimonials is unclear. This bill clarifies that the controller of a sporting testimonial (the person organizing and managing the fund) is responsible for paying the Class 1A contribution, not the employer. This also applies to any amounts the controller pays to cover the earner's income tax liability.

Government Spending

The bill is expected to increase government revenue through the collection of additional National Insurance contributions on termination awards and sporting testimonials. The exact financial impact is not specified in the bill text.

Groups Affected

• Employers: Will be affected by the changes regarding termination awards, potentially incurring additional costs.
• Employees: Receiving termination awards will see a portion of the award subject to Class 1A National Insurance contributions.
• Organizers of sporting testimonials: Will be responsible for paying the Class 1A National Insurance contributions on payments made to sportspeople from testimonial funds.
• Sportspeople: Receiving payments from sporting testimonials will see a portion of the payment subject to Class 1A National Insurance contributions.

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