PART 1General

Citation and commencement

1.—(1) These Regulations may be cited as the Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2017 and come into force on 6th April 2017.

PART 2Rates, limits and thresholds for National Insurance contributions

Interpretation

2.  In this Part—

“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.

Rate of and small profits threshold for Class 2 contributions

3.  In section 11 of the Act(13) and the Northern Ireland Act(14) (Class 2 contributions)—

(a)in subsections (2) and (6) for “£2.80” substitute “£2.85”; and

(b)in subsection (4) (small profits threshold) for “£5,965” substitute “£6,025”.

Amount of a Class 3 contribution

4.  In section 13(1) of the Act(15) and the Northern Ireland Act(16) (Class 3 contributions) for “£14.10” substitute “£14.25”.

Lower and upper limits of profits for Class 4 contributions

5.  In sections 15(3) and 18(1) and (1A) of the Act(17) and the Northern Ireland Act(18) (Class 4 contributions recoverable under the Income Tax Acts and under regulations)—

(a)for “£8,060” (lower limit) in each place where it appears substitute “£8,164”; and

(b)for “£43,000” (upper limit) in each place where it appears substitute “£45,000”.

Amendments to the Social Security (Contributions) Regulations 2001

6.  The Social Security (Contributions) Regulations 2001(19) are amended as follows.

7.  In regulation 10 (earnings limits and thresholds)—

(a)in paragraph (a) (lower earnings limit: primary Class 1 contributions) for “£112” substitute “£113”;

(b)in paragraph (b) (upper earnings limit: primary Class 1 contributions) for “£827” substitute “£866”;

(c)in paragraph (c) (primary threshold: primary Class 1 contributions) for “£155” substitute “£157”;

(d)in paragraph (d) (secondary threshold: secondary Class 1 contributions) for “£156” substitute “£157”;

(e)in paragraph (e) (upper secondary threshold: secondary Class 1 contributions in relation to the Under 21 group) for “£827” substitute “£866”; and

(f)in paragraph (f) (upper secondary threshold: secondary Class 1 contributions in relation to relevant apprentices) for “£827” substitute “£866”.

8.  In regulation 11 (prescribed equivalents)—

(a)in paragraph (2A)—

(i)in sub-paragraph (a) for “£3,583” substitute “£3,750”; and

(ii)in sub-paragraph (b) for “£43,000” substitute “£45,000”;

(b)in paragraph (3)—

(i)in sub-paragraph (a) for “£672” substitute “£680”; and

(ii)in sub-paragraph (b) for “£8,060” substitute “£8,164”;

(c)in paragraph (3A)—

(i)in sub-paragraph (a) for “£676” substitute “£680”; and

(ii)in sub-paragraph (b) for “£8,112” substitute “£8,164”;

(d)in paragraph (3B)—

(i)in sub-paragraph (a) for “£3,583” substitute “£3,750”; and

(ii)in sub-paragraph (b) for “£43,000” substitute “£45,000”; and

(e)in paragraph (3C)—

(i)in sub-paragraph (a) for “£3,583” substitute “£3,750”; and

(ii)in sub-paragraph (b) for “£43,000” substitute “£45,000”.

PART 3National Insurance Funds

Prescribed percentage of estimated benefit expenditure – Great Britain

9.  Section 2(2) of the Social Security Act 1993 (payments into National Insurance Fund out of money provided by Parliament) has effect with respect to the tax year 2017-18 and the prescribed percentage of estimated benefit expenditure for the financial year ending with 31st March in that tax year shall be 5 per cent.

Prescribed percentage of estimated benefit expenditure – Northern Ireland

10.  Article 4(3) of the Social Security (Northern Ireland) Order 1993 (payments into Northern Ireland National Insurance Fund out of appropriated money) has effect with respect to the tax year 2017-18 and the prescribed percentage of estimated benefit expenditure for the financial year ending with 31st March in that tax year shall be 5 per cent.

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Social Security Contributions and Benefits Act 1992 (c. 4) and corresponding provisions in the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7) (“the Acts”), and the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004) (“the Contributions Regulations”). The amendments have effect from 6th April 2017.

Regulation 3 increases the rate at which Class 2 National Insurance contributions (“NICs”) are payable by self-employed earners, specified in section 11(2) and (6) of the Acts, from £2.80 to £2.85 per week. It also increases the small profits threshold specified in section 11(4) of the Acts, which is the minimum amount of profits that a self-employed earner must generate to incur liability to Class 2 NICs, from £5,965 to £6,025 per year.

Regulation 4 increases the amount of a voluntary Class 3 NIC, specified in section 13(1) of the Acts, from £14.10 to £14.25.

Regulation 5 increases the lower and upper profits limits for Class 4 NICs specified in sections 15 and 18 of the Acts, between which Class 4 NICs are payable by the self-employed at the main Class 4 percentage rate. The lower limit increases from £8,060 to £8,164 per year and the upper limit from £43,000 to £45,000 per year.

Regulation 7 increases a number of weekly earnings limits and thresholds for determining liability to Class 1 NICs and entitlement to associated state benefits specified in regulation 10 of the Contributions Regulations: (i) the lower earnings limit, above which an earner gains access to certain state benefits, increases from £112 to £113; (ii) the upper earnings limit, above which primary Class 1 NICs are payable at the additional primary percentage, increases from £827 to £866; (iii) the primary threshold, above which primary Class 1 NICs are payable at the main primary percentage, increases from £155 to £157; (iv) the secondary threshold, above which secondary Class 1 NICs are payable, increases from £156 to £157; (v) the upper secondary threshold for the under 21 age group, below which secondary Class 1 NICs are payable at a reduced age-related percentage, increases from £827 to £866; and (vi) the upper secondary threshold for relevant apprentices, below which secondary Class 1 NICs are payable at zero-rate, increases from £827 to £866.

Regulation 8 increases the prescribed equivalents of the upper earnings limit, the primary threshold, the secondary threshold, and the upper secondary thresholds for the under 21 age group and relevant apprentices specified in regulation 11 of the Contributions Regulations, for monthly and yearly earnings periods.

Regulation 9 provides for section 2(2) of the Social Security Act 1993 (c. 3) to have effect for the tax year 2017-18. This allows money provided by Parliament to be paid into the National Insurance Fund up to a limit of 5 per cent of the estimated benefit expenditure for the financial year ending with 31st March 2018. Regulation 10 makes corresponding provision for Northern Ireland, by giving effect to article 4(3) of the Social Security (Northern Ireland) Order 1993 (S.I. 1993/592 (N.I. 2)).

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 Regulations, was laid before Parliament with the draft of these Regulations. A copy of the report can be found on the Government Actuary’s Department website at https://www.gov.uk/government/collections/uk-social-security-short-term-and-long-term-reports; this is also available to purchase from the TSO Shop on their website at https://www.tsoshop.co.uk/ or by telephone at 0333 202 5070.

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. A Tax Information and Impact Note on the alignment of the primary and secondary thresholds for Class 1 NICs was published on 5th December 2016 and is available athttps://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.