§ The Paymaster General (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 2004. These rates and limits will also apply to Northern Ireland National Insurance Contributions.
126WSEMPLOYERS 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 £79 a week. It is set at the level of the basic Retirement Pension for a single person from April 2004 and rounded down to the nearest pound.
The Primary and Secondary Thresholds for Class 1 contributions will continue to be aligned with the weekly amount of the income tax personal allowance, which will be increased to £4,745 from April 2004. The Primary and Secondary Thresholds will therefore be increased to £91 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 £610.
THE SELF-EMPLOYED
The rate of Class 2 contributions will be raised to £2.05 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 £120 to £4,215 in line with inflation.
The annual lower profits limit for liability to Class 4 contributions will increase to £4,745 a year (in line with the income tax personal allowance). The Upper Profits Limit will increase by £780 to £31,720, 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 20 pence to £7.15 a week.
SHARE FISHERMEN
The special rate of Class 2 contributions for share fishermen, which allows them to build entitlement to contributory Jobseekers' Allowance in addition to the other contributory benefits available to the self-employed, will be increased to £2.70 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 10 pence to £3.95 in line with the statutory formula of 5 per cent of the primary Class 1 Lower Earnings Limit.
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 2004–05 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.
I shall be laying a draft re-rating order before Parliament in due course. This will accompany a report by the Government Actuary to myself and my right hon. Friend the Secretary of State for Work and Pensions which we shall jointly present to Parliament.
127WSThe following table sets out the rates, earnings limits and thresholds for National Insurance Contributions proposed for 2004–05.
National Insurance Contributions, Proposed re-rating, April 2004 Item 2004–05 Lower Earnings Limit, primary £79 Class 1 Upper Earnings Limit, primary £610 Class 1 Primary Threshold £91 Secondary Threshold £91 Employees' primary Class 1 11% from £91.01 to £610 plus rate 1% above £610 Employees' contracted-out 1.6% rebate Married women's reduced rate 4.85% from £91 01 to £610 plus 1% above £610 Employers' secondary Class 1 12.8% on earnings above £91 rate Employers' contracted-out 3.5% rebate, salary-related schemes Employers' contracted-out 1.0% rebate, money-purchase schemes Class 2 rate £2.05 Class 2 Small Earnings £4,215 Exception Special Class 2 rate for share £2.70 fishermen Special Class 2 rate for £3.95 volunteer development workers Class 3 rate £7.15 Class 4 rate 8% from £4,745 to £31,720 plus 1% above £31,720
Class 4 Lower Profits Limit £4,745 Class 4 Upper Profits Limit £31,720