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HMRC internal manual

National Insurance Manual

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Class 1 structural overview from 6 April 2003 to 5 April 2009: structural changes: primary not contracted-out NICs

Section 8, SSCBA 1992

Sections 143 and 145 of the Social Security Administration Act 1992

NIM01102 explains the background to the Class 1 NICs calculation changes introduced from 6 April 2003.

Section 8 of SSCBA 92 provides for the calculation of primary Class 1 contributions and Section 1 of the National Insurance Contributions Act 2002 substituted a new section 8 with effect from 6 April 2003.

The new section 8 provides that where a primary Class 1 contribution is payable as mentioned in section 6(1)(a) SSCBA 92, see NIM02010 and NIM02015, the amount of the contribution is the aggregate of:

  • the main primary percentage on so much of the earner’s earnings paid in a tax week in respect of the employment in question as

 

  • exceeds the Primary Threshold (or the prescribed equivalent), see NIM01008, but
  • does not exceed the current Upper Earnings Limit (or the prescribed equivalent), see NIM01009, and

 

  • the additional primary percentage on so much of the earner’s earnings as exceeds the Upper Earnings Limit (or the prescribed equivalent)

Section 8 also provides that for the tax year beginning 6 April 2003 onwards:

  • the main primary percentage is 11% and
  • the additional primary percentage is 1%.

The main primary percentage remains subject to alteration under sections 143 and 145 of the Social Security Administration Act 1992. These sections allow alterations to be made to the primary and secondary Class 1 NICs percentages. The additional primary percentage rate cannot be altered without further primary legislation.

Similar changes were made to the Social Security Contributions and Benefits (Northern Ireland) Act 1992.