HL Deb 15 October 1996 vol 574 c194WA
Lord Vinson

asked Her Majesty's Government:

Why, if in aggregate national insurance (NI) contributions are not payable (by employer or employee) on annual incomes under approximately £3,170, automatic deductions of NI made under the PAYE system when weekly earnings exceed 1/52 of £3,170 are not refundable as is income tax which had been collected in the same way.

Lord Mackay of Ardbrecknish

The national insurance contributions are not refundable because, unlike PAYE income tax, liability for Class 1 contributions is non-cumulative and depends on the frequency of employees' pay periods and the level of their earnings in each of those periods. Weekly paid employees and their employers pay Class 1 contributions on each occasion that the employees' weekly earnings equal or exceed the weekly lower earnings limit (currently £61), whether or not their total annual earnings from the employment reach 52 times the weekly lower earnings limit (currently £3,172). These contributions, and any other Class 1 contributions, Class 2 contributions for periods of self-employment and Class 3 voluntary contributions paid in the same contribution year, count towards making that year a qualifying year for entitlement to contributory social security benefits. Refunding Class 1 contributions paid in any weekly paid employment with annual earnings less than the annual lower earnings limit could result in that year not being a qualifying year for benefit purposes.