National Insurance Contributions Bill

The National Insurance Contributions Bill was introduced in the House of Commons on 11 October 2005. The Bill contains measures to support the Government’s objectives of fairness and opportunity by ensuring all employers and employees pay the proper amount of tax and National Insurance contributions on the rewards of employment.

The Bill provides for a power to make regulations in respect of NICs that reflect backdated tax changes that take effect on or after 2 December 2004. These earnings may be outside the scope of existing NICs legislation. The power will allow for NICs liability to be charged on these earnings back to 2 December 2004, if necessary.

Provisions in the Bill also allow for consequential changes for the purposes of contributions, contributory benefit and statutory payments where appropriate. Where a NICs charge is levied back to 2 December 2004, to mirror the start date of anti-avoidance tax measures, those NICs will count for the purposes of contributory benefit and statutory payments.

The Bill also provides a power to extend the avoidance disclosure rules that currently apply to tax to NICs. And it will prevent the use of NIC Elections and agreements over securities in avoidance schemes that have been targeted by any backdated NICs regulations so that employers cannot pass on Employers’ NICs liability that they have tried to avoid to their employees.