National Insurance Contributions Bill

The National Insurance Contributions Bill was published on 13 November 2007. It will help deliver the Budget 2007 personal tax reforms and ensure that the Government begins to implement its commitment to provide a solid and simpler state pension foundation by around 2030.

In the last Budget the former Chancellor announced a package of reforms to modernise the income tax and benefit system. The changes included the alignment of the Upper Earnings Limit and the Upper Profits Limit for National Insurance contributions, with the increased level at which higher rate income tax becomes payable from 2009/10.

Following the announcement by the present Chancellor in the 2007 Pre Budget Report this Bill also includes changes to the State Second Pension to bring forward the introduction of the Upper Accrual Point to 6 April 2009.

The Upper Accrual Point is a new threshold for the calculation of both State Second Pension and contracted-out rebates. For State Second Pension and rebate calculations only, it replaces the Upper Earnings Limit . It is being introduced early to ensure that the Government’s personal tax package and the reforms to State Pension introduced in the Pensions Act 2007 can be delivered as planned.