§ Mr. HanleyTo ask the Secretary of State for Social Security what changes there have been to the definition of earnings for national insurance calculation purposes since the last fiscal year; and under what authority such changes were made.
§ Mr. Peter LloydSection 3(1) of the Social Security Act 1975 defines earnings so as to include any remuneration or profit derived from an employment. In May 1988 the Social Security (Contributions) Amendment (No. 3) Regulations 1988 (SI 1988/No. 860) came into force. These regulations, which were made by exercising powers in section 3(2) and 3(3) of the 1975 Social Security Act, provided that payments to employed earners in the form of a wide range of securities but not equities, should be included in earnings for contributions purposes.
Paragraph 1 of schedule 7 to the Social Security Bill will also amend section 3 of the Social Security Act 1975 to provide that earnings will include payments which are consideration for restrictive undertakings specified in subsection (1) and (2) of section 313 of the Income and Taxes Act 1988.
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§ Mr. HanleyTo ask the Secretary of State for Social Security what differences there are between the definitions of earnings for national insurance and PAYE purposes.
§ Mr. Peter LloydNational insurance contributions are charged on gross earnings and only earnings of all employees, with the exception of those employees who are over pensionable age. National insurance contributions are not charged on occupational pensions, and investment income. Further information on what is included in gross pay for national insurance purposes is included in the recently published "Employers Manual on National Insurance Contributions", which I have placed in the Library.
Income tax is deducted under PAYE on income from offices and employments, occupational pensions, certain social security benefits and lump sum payments.