HC Deb 11 February 1997 vol 290 c172W
Mr. Malcolm Bruce

To ask the Secretary of State for Social Security if he will list, for each of the last seven years, the extensions of the application of employers' national insurance contributions to benefits in kind designed to eliminate the avoidance of national insurance contributions on bonuses and other one-off benefits in kind; if he will give his estimate of the savings accruing from each measure; and if he will make a statement. [13332]

Mr. Heald

[holding answer 30 January 1997]: The measures introduced in December 1996 to prevent national insurance contribution—NIC—avoidance by paying employees in their own company's shares and share options were announced in my written answer of 4 December, Official Report, column 715–16, to my hon. Friend the Member for Chingford (Mr. Duncan Smith).

The following measures to combat NIC avoidance were introduced prior to December 1996.

In 1991 payments by way of a wide range of financial instruments such as shares, other than own company shares, gilts and insurance policies became subject to NICs.

In 1993 payments by way of commodities capable of being sold on a recognised investment exchange or the London bullion market such as precious metals and gold bullion and vouchers for these commodities became subject to NICs.

In 1994 payments by way of alcoholic liquors on which no UK duty had been paid, gemstones and any vouchers for these assets became subject to NICs.

In 1995 payment by way of assets for which trading arrangements exist, vouchers for those assets and vouchers which are themselves the subject of trading arrangements became subject to NICs.

Employers are not required to identify bonuses or other one-off payments. The behavioural effects of measures against NICs avoidance, particularly those aimed at a wide range of asset-based avoidance, make precise long-term estimates of savings unreliable.

The Inland Revenue estimates, in respect of the changes made in December 1996 specifically related to own-company shares, that the annual savings would amount to about £30 million.