HC Deb 08 November 2000 vol 356 cc274-5W
Barbara Follett

To ask the Chancellor of the Exchequer if he has completed his review of national insurance contributions for 2001–02. [137677]

Dawn Primarolo

I have completed the annual review under section 141 of the Social Security Administration Act 1992. In line with the reforms to national insurance contributions announced by my right hon. Friend the Chancellor of the Exchequer in his March 1999 Budget and reaffirmed in his pre-Budget reports of 9 November 1999 and 8 November 2000, I propose the following changes to take effect from 6 April 2001. These rates and limits will also apply to Northern Ireland national insurance contributions.

Employers and Employees In line with the Social Security Contributions and Benefits Act 1992, the lower earnings limit for primary class 1 contributions is to be raised to £72 a week. It is set at the level of the basic retirement pension for a single person from April 2001 and rounded down to the nearest pound. The primary threshold for primary class 1 contributions will be aligned with the secondary threshold for secondary class 1 contributions and the weekly amount of the income tax personal allowance at £87 a week. This means that no tax or class 1 contributions will actually be paid on earnings below this level. The upper earnings limit for primary class 1 contributions will be raised to £575 a week to ensure a fair base of earnings liable to such contributions. The rate of secondary class 1 contributions payable by all employers is to be reduced by 0.3 per cent., from 12.2 per cent. to 11.9 per cent.

The self-employed The rate of class 2 contributions is to remain at £2 a week. Self-employed people with earnings below the annual small earnings exception can apply to be exempted from paying class 2 contributions. This limit will be raised by £130 to £3,955. The annual lower and upper profits limits for liability to class 4 contributions will be raised respectively by £150 to £4,535 (in line with the income tax personal allowance) and by £2,080 to £29,900, to maintain the link with employees' earnings liable to class 1 contributions and ensure a fair base for contributions by the self-employed.

National insurance contributions, proposed re-rating, April 2001
Item 2001–02
Lower Earnings Limit, primary Class 1 £72 per week
Upper Earnings Limit, primary Class 1 £575 per week
Primary Threshold £87 per week
Secondary Threshold £87 per week
Employees' primary Class 1 rate 10 per cent. of £87.01 to £575 per week
Employees' contracted-out rebate 1.6 per cent.
Married women's reduced rate 3.85 per cent.
Employers' secondary Class 1 rate 11.9 per cent. on earnings above £87 per week
Employers' contracted-out rebate, salary-related schemes 3 per cent.
Employers' contracted-out rebate, money-purchase schemes 0.6 per cent.
Class 2 rate £2 per week
Class 2 Small Earnings Exception £3,955 per year
Special Class 2 rate for share fishermen £2.65 per week
Special Class 2 rate for volunteer development workers £3.60 per week
Class 3 rate £6.75 per week
Class 4 rate 7 per cent.
Class 4 Lower Profits Limit £4,535 per year
Class 4 Upper Profits Limit £29,900 per year