Statutory Instruments
2013 No. 559

Social Security
The Social Security (Contributions) (Re-rating) Order 2013

Made
12th March 2013

Coming into force
6th April 2013

This Order is made by the Treasury in exercise of the powers conferred by sections 141(4) and (5) and 142(2) and (3) of the Social Security Administration Act 1992 (“the Administration Act”)(1) and section 129 of the Social Security Administration (Northern Ireland) Act 1992 (“the Northern Ireland Administration Act”)(2).
This Order is made as a result of the Treasury carrying out in the tax year 2012-13 a review of the general level of earnings in Great Britain in accordance with section 141(1) and (2) of the Administration Act(3).
The Treasury have determined that an Order should be made under section 141 of the Administration Act, amending Part 1 of the Social Security Contributions and Benefits Act 1992(4) by altering the rates of Class 2 and Class 3 contributions, the amount of earnings below which an earner may be excepted from liability for Class 2 contributions and the lower and upper limits of profits to be taken into account for Class 4 contributions.
This Order makes provision for Northern Ireland, which corresponds to that mentioned in relation to Great Britain in the preceding recital, in accordance with section 129 of the Northern Ireland Administration Act.

A draft of this Order was laid before Parliament in accordance with the provisions of sections 141(3) and 190(1)(a) of the Administration Act(5) and section 166(10A) of the Northern Ireland Administration Act(6) and approved by a resolution of each House of Parliament.

Citation, commencement and interpretation

1.—(1) This Order may be cited as the Social Security (Contributions) (Re-rating) Order 2013 and comes into force on 6th April 2013.

(2) In this Order—

“the Act” means the Social Security Contributions and Benefits Act 1992; and

“the Northern Ireland Act” means the Social Security Contributions and Benefits (Northern Ireland) Act 1992(7).

Rate of and small earnings exception from Class 2 contributions

2.  In section 11 of the Act(8) and the Northern Ireland Act(9) (Class 2 contributions)—

(a)in subsection (1) for “£2.65” substitute “£2.70”; and

(b)in subsection (4) (small earnings exception) for “£5,595” substitute “£5,725”.

Amount of Class 3 contributions

3.  In section 13(1) of the Act(10) and the Northern Ireland Act(11) (amount of Class 3 contributions) for “£13.25” substitute “£13.55”.

Lower and upper limits for Class 4 contributions

4.  In sections 15(3) and 18(1) and (1A) of the Act(12) and the Northern Ireland Act(13) (Class 4 contributions recoverable under the Income Tax Acts and under regulations)—

(a)for “£7,605” (lower limit) in each place where it appears substitute “£7,755”; and

(b)for “£42,475” (upper limit) in each place where it appears substitute “£41,450”.

Desmond Swayne
Robert Goodwill
Two of the Lords Commissioners of Her Majesty’s Treasury
12th March 2013

EXPLANATORY NOTE

(This note is not part of the Order)

This Order, which comes into force on 6th April 2013, increases the rates of Class 2 and Class 3 contributions specified in sections 11(1) and 13(1) of the Social Security Contributions and Benefits Act 1992 (c. 7) (“the Act”) from £2.65 to £2.70 and from £13.25 to £13.55, respectively. It also increases the amount of earnings specified in section 11(4) of the Act, below which an earner may be excepted from liability for Class 2 contributions from £5,595 to £5,725 (Articles 2 and 3).

The Order increases from £7,605 to £7,755 the lower limit and decreases from £42,475 to £41,450 the upper limit of profits specified in sections 15 and 18 of the Act, between which Class 4 contributions are payable at the main Class 4 percentage rate (Article 4).

Articles 2 to 4 of the Order also make provision for Northern Ireland corresponding to that described in the preceding two paragraphs (the section numbers of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 8) are the same as those in the Act).

In accordance with section 142(1) of the Social Security Administration Act 1992 (c. 5), a copy of the report by the Government Actuary, giving the Actuary’s opinion on the likely effect on the National Insurance Fund of the making of the Order, including the amendments to sections 11(1), 11(4), 13(1), 15(3), 18(1) and 18(1A) of the Act, was laid before Parliament with the draft of this Order. A copy of the report can be found on the Government Actuary’s Department website at http://www.gad.gov.uk/Publications/index.html .

A Tax Information and Impact Note has not been prepared for this instrument as it gives effect to previously announced policy and it relates to routine changes to rates, limits and thresholds to a predetermined indexation formula.

(1)
1992 c. 5; subsections (4) and (5) of section 141 were amended by paragraph 16 of Schedule 1 to the National Insurance Contributions Act 2002 (c. 19) (“the Contributions Act 2002”). Section 142(2) was amended by paragraph 45(3) of Schedule 3 to the Social Security Contributions (Transfer of Functions, etc) Act 1999 (c. 2) (“the Transfer Act”).

(2)
1992 c. 8; the relevant amendment to section 129 is that made by paragraph 43 of Schedule 3 to the Social Security Contributions (Transfer of Functions, etc.) (Northern Ireland) Order 1999 (S.I. 1999/671) (“the Transfer Order”).

(3)
Subsections (1) and (2) of section 141 were amended by paragraph 44(2) and (3) of Schedule 3 to the Transfer Act.

(4)
1992 c. 4.

(5)
Subsection (3) of section 141 was amended by paragraph 44(4) of Schedule 3 to the Transfer Act. Section 190(1)(a) was amended by paragraph 110 of Schedule 7 to the Social Security Act 1998 (c. 14), Part 6 of Schedule 13 to the Welfare Reform and Pensions Act 1999 (c. 30) and paragraph 30 of Part 5 of Schedule 1 to the Pension Act 2007 (c. 22).

(6)
Section 166(10A) was inserted by paragraph 50(4) of Schedule 3 to the Transfer Order.

(7)
1992 c. 7.

(8)
Section 11 was amended by paragraph 12 of Schedule 3 to the Transfer Act. The figure in subsection (1) was last substituted by article 2(a) of S.I. 2012/807. The figure in subsection (4) was last substituted by article 2(b) of S.I. 2012/807.

(9)
Section 11 was amended by paragraph 13 of Schedule 3 to the Transfer Order. The figure in subsection (1) was last substituted by article 2(a) of S.I. 2012/807. The figure in subsection (4) was last substituted by article 2(b) of S.I. 2012/807.

(10)
Section 13 was amended by paragraph 14 of Schedule 3 to the Transfer Act. The figure in subsection (1) was last substituted by article 3 of S.I. 2012/807.

(11)
Section 13 was amended by paragraph 15 of Schedule 3 to the Transfer Order. The figure in subsection (1) was last substituted by article 3 of S.I. 2012/807.

(12)
Section 15(3) was substituted by section 3(1) of the Contributions Act 2002 and was amended by paragraph 420(3) of Schedule 1 to the Income Tax (Trading and Other Income) Act 2005 (c. 5) (“ITTOIA 2005”). Section 18(1) was amended by paragraph 18(2) of Schedule 3 to the Transfer Act and by Schedule 2 to the Contributions Act 2002. Section 18(1A) was inserted by section 3(3) of the Contributions Act 2002. The amount of the lower limit in each of these provisions was last substituted by article 4 of S.I. 2012/807. The amount of the upper limit in each of those provisions was last substituted by article 4(b) of S.I. 2011/938.

(13)
Section 15(3) was substituted by section 3(2) of the Contributions Act 2002 and was amended by paragraph 424 of Schedule 1 to ITTOIA 2005. Section 18(1) was amended by paragraph 18(2) of Schedule 3 to the Transfer Order and by Schedule 2 to the Contributions Act 2002. Section 18(1A) was inserted by section 3(4) of the Contributions Act 2002. The amount of the lower limit in each of these provisions was last substituted by article 4 of S.I. 2012/807. The amount of the upper limit in each of those provisions was last substituted by article 4(b) of S.I. 2011/938.