New National Insurance Contributions Bill confirms new NICs rates from AprilWednesday, October 20th, 2010
The Coalition government announced early after coming to power that the 2011/12 increases in Class 1 NICs rates announced by the Labour government in the 2009 Pre-Budget Report (PBR) would be applied unchanged. The promised National Insurance Contributions Bill, introduced in Parliament on 14 October, sets out the new rates as follows:
- the main primary (employee) percentage increases from 11% to 12%
- the additional primary percentage increases from 1% to 2%
- the secondary (employer) percentage increases from 12.8% to 13.8%.
These increases are given effect by amendments to sections 8 and 9 of the Social Security Contributions and Benefits Act 1992. The Bill makes no reference to corresponding increases in the Class 1A and 1B rates to 13.8% (as announced in the 2009 PBR), nor to any increase in the reduced rate for married women (not mentioned at all in the 2009 PBR). No announcements have been made about the level of the contracted-out rebates.
Currently, therefore, the full Class 1 NICs rates structure from April 2011 is expected to be as follows:
|Salary Related||Money Purchase|
|Table Letters||A, B, C and J||D, E and L||F, G and S|
|Contributions on earnings up to LEL||NIL||NIL||NIL|
|Contributions on earnings between the LEL and ST||0%||0%, less 3.7% rebate||0%, less 1.4% rebate|
|Contributions on earnings between the ST and UAP||13.8%||10.1%, i.e. 13.8% less 3.7% rebate||12.4%, i.e. 13.8% less 1.4% rebate|
|Contributions on earnings between the UAP and UEL||13.8%||13.8%||13.8%|
|Contributions on earnings above UEL||13.8%||13.8%||13.8%|
|Table Letters||A||B||J||D and F||E and G||L and S|
|Contributions on earnings up to LEL||NIL||NIL||NIL||NIL||NIL||NIL|
|Contributions on earnings between the LEL and PT||0%||0%||0%||0% less 1.6% rebate||0%||0% less 1.6% rebate|
|Contributions on earnings between the PT and UAP||12%||4.85%||2%||10.4%, i.e. 12% less 1.6% rebate||4.85%||2%, i.e. 3.6% less 1.6% rebate|
|Contributions on earnings between the UAP and UEL||12%||4.85%||2%||12%||4.85%||2%|
|Contributions on earnings above UEL||2%||2%||2%||2%||2%||2%|
The Bill also contains the legislation to introduce the Regional Secondary Contributions Holiday for New Employees that was introduced on 6 September 2010. In an earlier newsletter we provided a detailed explanation of the scheme.