Changes to National Insurance Contributions (NICs) were today announced by The Paymaster General, Dawn Primarolo.
Outlining the changes she said:
“I have completed the annual review under Section 141 of the Social Security Administration Act 1992. In addition to the reforms to National Insurance contributions announced by my Rt. Hon Friend the Chancellor of the Exchequer in his March Budget. I propose the following changes to take effect from 6 April 2000.
Employers and Employees
In line with the Social Security Contributions and Benefits Act 1992, the Lower Earnings Limit for Class 1 contributions is to be raised to 67 pounds a week. It is set at the level of the basic retirement pension rate for a single person from April 2000, rounded down to the nearest pound.
Class 3 (Voluntary) Contributions The rate of Class 3 contributions will be increased by 10p to 6.55 pounds a week.
Although benefit expenditure from the National Insurance Fund will broadly match income, I need to ensure that the Fund can maintain a prudent working balance throughout the coming year. In accordance with Section 2(2) of the Social Security Act 1993, I propose to do so by prescribing that the maximum Treasury Grant which may be made available to the Fund in 2000/01 shall not exceed 2 per cent of the estimated benefit expenditure from the Fund for that year.”
NOTES FOR EDITORS
1. Draft estimates of the yield of National Insurance contributions will be included in the Government Actuary’s report on the draft of the Social Security (Contributions)(Re- rating and National Insurance Fund Payments) Order which will be laid before Parliament as usual.
2. A table which sets out the rates and thresholds for National Insurance Contributions proposed for 2000/01 is attached as an annex.
National Insurance Contributions Proposed April 2000 Re-rating
Lower Earnings Limit 67 pnds Upper Earnings Limit 535 pnds Primary Threshold 76 pnds Secondary Threshold 84 pnds Employee’s contributions 10% of 76.01 to 535 pnds
Employee’s Contracted-out Rebate 1.6% Married Women Reduced Rate 3.85% Employer’s Contribution Rates 12.2% Employer’s Contracted-out Rebate 3.0% COSR 0.6% COMP Class 2 Self employed Contribution 2.00 pnds Small Earnings Exception 3,825 pnds Class 3 (voluntary) Contribution 6.55 pnds Class 4 Contributions – Upper 27,820 pnds Profits Limit Class 4 Contributions – Lower 4,385 pnd Profits Limit Class 4 – Contribution Rate 7.0%
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