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National Insurance Contributions Act 2013-14
Bill is now an Act
Type of Bill:
The National Insurance Contributions Bill was announced in the Queen's Speech on 8 May 2013.
Chancellor George Osborne announced in the budget in March 2013 that companies in the UK were to get up to £2,000 off their National Insurance Contributions (NIC) in an attempt to boost job creation.
It was described it as "the largest tax cut in the budget" and NI payments will now go towards a number of benefits, including the state pension.
To balance this relief, the government has now introduced some new ways of collecting more NICs which includes looking at limited liability partnerships (LLPs). Currently, these companies often supply workers to UK businesses, but rely on their overseas status not to pay NICs on the employees' wages.
The Bill allows for:
- Reducing employer NICs bills each year by, from April 2014, entitling every business and charity to a £2000 Employment Allowance
- Extending the General Anti-Abuse Rule to NICs reinforcing the government's commitment to tackle abusive avoidance
- Strengthening legislation to prevent the use of offshore employment payroll companies (intermediaries to avoid employer NICs)
- Removing the presumption for self-employment for limited liability partnership members
The British Chamber of Commerce stated the new Employment Allowance would help their smallest companies take on staff and "give many businesses an important boost of confidence."
The Bill was presented to the House of Commons on 14 October 2013.
The National Insurance Contributions Bill received its second reading on 4 November 2013, with MPs unanimously approving the legislation to pass it on to committee stage. Among its provisions, the Bill contains legislation for the Employment Allowance which, from next April would give businesses and charities a £2,000 reduction off their National Insurance Contributions bill. Labour welcomed the proposals but said they would closely scrutinize its implementation, particularly the administering of the business tax reduction.
The first day of committee took place on 19 November 2013. The committee heard oral evidence from witnesses including the Federation of Small Businesses, Institute for Fiscal Studies, Financial Conduct Authority and the Treasury. In the second day of committee (21 November 2013), the committee considered clauses 1-20 and schedules 1-2 of the Bill. All of which, were agreed to. The Bill was reported without amendments.
The National Insurance (Contributions) Bill had its report stage and third reading on 10 December 2013, before passing to the House of Lords.
The government, following the announcements made in the autumn statement, introduced a new clause 3 which meant that employers employing workers under the age of 21 would no longer have to pay employers' class 1 national insurance contributions.
This was supported largely by the Opposition, but they had qualms over the timing of implementation, and an amendment relating to this was defeated. The government also introduced a series of technical amendments relating to limited liability partnerships and alternative investment fund managers, and removed clauses 12 and 13 from the Bill.
The House of Lords first reading took place on 11 December 2013. The Bill was brought from the Commons, read a first time and ordered to be printed.
The second reading for the Bill was held on 7 January 2014. After a short debate, the Bill was passed to a Grand Committee.
The committee stage for the Bill took place on 23 January 2014. Opposition attempts to put a duty on government to provide post-implementation reviews on the impact on jobs, youth unemployment and wages levels were withdrawn after government assurances in committee stage on Thursday.
Whilst the Bill was reported without amendment, the opposition did press the government on the effectiveness of anti-tax avoidance measures.
The report stage was scheduled to be held on 10 February 2014. However, the report was received without debate and subsequently, the Bill was passed to the third reading stage.
The House of Lords third reading stage took place on 25 February 2014. The Bill was passed without debate.