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HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
Updated
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Class 1 Structural Overview from 6 April 2003: Structural changes: Married women and widows reduced rate NICs

 

NIM01106 explains the changes to the structure of Class 1 NICs from 6 April 2003 provided by new section 8, SSCBA 1992 and introduced as part of the National Insurance Contributions Act 2002.

Section 8(3) SSCBA 92 provides that primary Class 1 NICs are subject to alteration for special cases. One of those special cases is married women and widows.

NIM30000 onwards provides detailed guidance on the liability for Class 1 NICs for certain married women and widows.

The National Insurance Contributions Act 2002 amended section 19(4)(a) of SSCBA 92 which provides for a reduced rate of Class 1 NICs to be paid by certain married women and widows. The amendment restricts the reduction available by providing for it to operate only on Class 1 contributions payable at the main primary percentage.

This means that those married women and widows with entitlement to pay reduced rate Class 1 NICs will pay:

 

  • a reduced main primary percentage on so much of their earnings paid in a tax week in respect of their employment as

 

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

 

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

For the tax year beginning 6th April 2003 onwards:

  • the main primary percentage for employees with a valid reduced rate election is 4.85% and
  • the additional primary percentage is 1%

Note that the married women’s reduced rate can never apply to the additional primary percentage.