§ Mr. Duncan SmithTo ask the Secretary of State for Social Security what plans he has to act against avoidance of national insurance contributions. [7943]
§ Mr. HealdWe are committed to acting against exploitation of the national insurance system by employers who undermine the contributory principle by avoiding paying their proper share of contributions on the earnings they pay to their employees.
I have today laid regulations (SI 1996/3031) which tighten the rules for contributions where employers pay their staff in shares and share options. Earnings paid in the form of shares provided under schemes not approved by the Inland Revenue and using shares or options for shares which are capable of being traded on a recognised investment exchange as defined in the Financial Services Act 1986, or which are provided in circumstances where "trading arrangements" exist within the meaning of the Fiance Act 1994, will be subject to national insurance contributions. They will be treated in the same way as income provided in cash or in the form of other non-cash assets such as gold bullion and diamonds.
The regulations will come into effect from midnight tonight. Shares acquired under options granted before midnight today will not be affected.
714WThese provisions are expected to save NICs of about £30 million annually.