National Insurance Contributions (Hansard, 27 November 2001)

§ Mr. Chope
To ask the Chancellor of the Exchequer when the Inland Revenue National Insurance Contributions Office will respond to the request made by Mr. Welch of Burton, Christchurch to be able to make self-employed national insurance contributions. [18653]

§ Dawn Primarolo
The National Insurance Contributions Office wrote to Mr. Welch on 21 November, and I am writing to the hon. Member about his constituent's concerns.

§ Barbara Follett
To ask the Chancellor of the Exchequer if he has completed his review of national insurance contributions for 2002–03. [18972]

§ Dawn Primarolo
I have completed the annual review under section 141 of the Social Security Administration Act 1992. I propose the following changes to take effect from 6 April 2002. 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 £75 a week. It is 864W set at the level of the basic Retirement Pension for a single person from April 2002 and rounded down to the nearest pound.
The Primary and Secondary Thresholds for Class 1 contributions will continue to be aligned with the weekly amounts of the income tax personal allowance at £89 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 £585.
The rate of secondary Class 1 contributions payable by all employers is to be reduced by 0.1 per cent. from 11.9 per cent. to 11.8 per cent. This is to ensure that the overall effect on industry from the introduction of the Aggregates Levy will be revenue neutral.
The self-employed
The rate of Class 2 contributions will 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 £70 to £4,025.
The annual lower and upper profits limits for liability to Class 4 contributions will be raised respectively by £80 to £4,615 (in line with the income tax personal allowance) and by £520 to £30,420, to maintain the link with employees' earnings liable to Class 1 contributions.
Class 3
The rate of Class 3 voluntary contributions will be increased by 10 pence to £6.85 a week.
The special rate of Class 2 contributions for share fishermen, which allows them to build entitlement to contributory Jobseeker's Allowance in addition to the other contributory benefits available to the self-employed, will continue to be £2.65 a week.
Volunteer Development Workers
The special rate of Class 2 contributions for volunteer development workers, which entitles them to the full range of contributory benefits, will be increased by 15 pence to £3.75 in line with the statutory formula of 5 per cent. of the primary Class 1 Lower Earnings Limit.
865W
Treasury Grant
I need to ensure that the Fund can maintain a prudent working balance throughout the coming year. In accordance with section 2(2) of the Social Security Act 1993, I propose to do so by prescribing that the maximum Treasury Grant which may be made available to the fund in 2002–03 shall not exceed 2 per cent. of the estimated benefit expenditure for that year. Similar provision will be made in respect of the Northern Ireland National Insurance Fund.

National insurance contributions, proposed re-rating, April 2002

Item 2002–03

Lower Earnings Limit, primary Class 1 £75

Upper Earnings Limit, primary Class 1 £585

Primary Threshold £89

Secondary Threshold £89

Employees' primary Class 1 rate 10 per cent. from £89.01 to £585

Employees' contracted-out rebate 1.6 per cent.

Married women's reduced rate 3.85 per cent.

Employers' secondary Class 1 rate 11.8 per cent. on earnings above £89

Employers' contracted-out rebate, salary-related schemes 3.5 per cent.

Employers' contracted-out rebate, money-purchase schemes 1.0 per cent.

Class 2 rate £2

Class 2 Small Earnings Exception £4,025

Special Class 2 rate for share fishermen £2.65

Special Class 2 rate for volunteer development workers £3.75

Class 3 rate £6.85

Class 4 rate 7 per cent.

Class 4 Lower Profits Limit £4,615

Class 4 Upper Profits Limit £30,420

National insurance contributions, proposed re-rating, April 2002
Item	2002–03
Lower Earnings Limit, primary Class 1	£75
Upper Earnings Limit, primary Class 1	£585
Primary Threshold	£89
Secondary Threshold	£89
Employees' primary Class 1 rate	10 per cent. from £89.01 to £585
Employees' contracted-out rebate	1.6 per cent.
Married women's reduced rate	3.85 per cent.
Employers' secondary Class 1 rate	11.8 per cent. on earnings above £89
Employers' contracted-out rebate, salary-related schemes	3.5 per cent.
Employers' contracted-out rebate, money-purchase schemes	1.0 per cent.
Class 2 rate	£2
Class 2 Small Earnings Exception	£4,025
Special Class 2 rate for share fishermen	£2.65
Special Class 2 rate for volunteer development workers	£3.75
Class 3 rate	£6.85
Class 4 rate	7 per cent.
Class 4 Lower Profits Limit	£4,615
Class 4 Upper Profits Limit	£30,420