NATIONAL INSURANCE CONTRIBUTIONS BILL

The purpose of the bill is to:

• Implement part of the recent Budget announcement by the Chancellor on 21 March 2007 setting out a package of reforms to modernise the tax and benefit system;
• Enable alignment of the Upper Earnings Limit (UEL) for Class 1 NICs purposes with the point at which higher rate income tax becomes payable;
• Remove the current primary Social Security legislation that restricts the maximum UEL to no more than seven and a half times the Primary Threshold. The Primary Threshold is the point at which Class 1 NICs become payable on a person's earnings;

The main benefits of the bill and the related changes to personal taxation are:

• Delivery of an integral part of  the commitment made by the Chancellor in the Budget to bring forward a package of reforms to modernise the personal tax and benefit system, offering more support for work, families and pensioners.

The main elements of the bill are:

• New regulation making powers that would enable Ministers to align the UEL with the point at which higher rate tax becomes payable (subject to affirmative resolution);
• Removal of the restrictions to the current maximum level of the UEL, which stipulate that it can be no more than seven and a half times the Primary Threshold;

The Bill would apply to:

• The United Kingdom.

Related Documents:

• Budget Note (BN)01 published on 21 March 2007 - "Modernising the Personal Tax System".

Existing Legislation in this area is:

• The Social Security Contributions and Social Security Act 1992;
• The Social Security Administration Act 1992; and
• The Social Security (Contributions) Regulations 2001.

Comments:

If you have any comments on the draft programme or individual bill being proposed, you can email them to:

legislation@commonsleader.x.gsi.gov.uk