§ Mr. Trotterasked the Secretary of State for Social Services what are the annual national insurance contributions payable currently and after April 1975 in respect of a person with an income of £3,600 per annum who is (a) an employee and (b) self-employed; and what are the percentage increases in contributions in each case.
§ Mr. O'MalleyThe total class 1 contributions in respect of such an employee who is not contracted out of the graduated pension scheme are currently about £431 a year, and after April 1975, under the Social Security Act 1973 as amended by the Social Security Amendment Bill, they will be about £502, an increase of about 16½ per cent. For such a self-employed man they are currently about £125 a year and after April 1975 they will be about £285, an increase of about 128 per cent.
636WThe difference in the percentage increases reflects the fact that the self-employed currently pay no graduated contributions at all, so that the self-employed man on £3,600 a year pays under 3½ per cent. in contributions, compared with the 10 per cent. which a self-employed man on £24 a week pays and the 12 per cent. paid in respect of an employee on £3,600 a year.
At present the self-employed are paying about 40 per cent. of the cost of the benefits to which they are entitled. The Social Security Act 1973 increased this ratio to about 60 per cent. but this still leaves them with a substantial subsidy at the expense of other contributors to the scheme.
§ Mr. Trotterasked the Secretary of State for Social Services what is the current annual national insurance contribution payable by the director of a private limited company who is treated as being self-employed and the annual contributions payable in respect of such a director after April 1975 on the assumption that his remuneration from the company is £3,600 a year.
§ Mr. O'MalleyCurrently about £125 a year. After April 1975, under the Social Security Act 1973—which puts directors with emoluments chargeable to income tax under Schedule E into class I—as amended by the Social Security Amendment Bill, the primary class I contribution for such a director with earnings of £3,600 a year will be about £197 a year and the secondary contribution will be about £305 a year.