| The
National Insurance Contributions and Statutory Payments
Bill published on the United
Kingdom Parliament web site was introduced into the House of Commons on 27
November 2003. The Bill completed its Commons stages
without amendment on 28 January 2004, and had its First
Reading in the House of Lords on 29 January 2004.
The Bill and other supporting documents were published
on 27 November 2003. All related Revenue documents can
be accessed from this page. The Explanatory Notes accompanying
the Bill have been revised to add clarity. For example,
we have now defined the terms 'securities' and 'artificially
depressed market value'. They will be re-published on
the United Kingdom Parliament web site. You can see the
revised version by following the link below. A few very
minor changes have also been made to the Regulatory Impact
Assessment. We have not re-published this because the
changes are so minor. Should anyone wish to see a copy
of the revised version please contact the Bill Team on
020 7438 9153.
Some of the documents are in Portable Document Format
(PDF). To view these documents you will need to have
Adobe Acrobat Reader installed on your PC.
Contents
Explanatory Notes
Letters from Ministers
News Releases
Regulatory Impact Assessment
(PDF 616K)
Draft regulations
(PDF 128K)
FAQ
Explanatory Notes
Explanatory Notes on the United
Kingdom Parliament web site.
These notes help to explain what is the intention of
the clauses in the NICs and SP Bill
Letters from Ministers
Regulatory impact Assessment and draft regulations
The Paymaster General to
Norman Lamb MP (PDF 798K) 11 February 2004
News Releases
Release
dated 27 November 2003
Frequently Asked Questions
General
Share schemes
General
Q Does the Bill increase NICs charges?
A No, the Bill makes useful changes to the administration
of National Insurance and statutory payments to reduce
technical differences between them and the administration
of tax. It makes no changes to the rates or structure
of NICs.
Q When will the Bill receive Royal Assent?
A The NICs Bill is subject to Parliamentary process
and it will receive Royal Assent on completion of
that process. We can confirm the Bill was introduced
into the House of Commons on the 27 November and
we will update this website as the Bill progresses
through Parliament.
Q When will the supporting draft Regulations
be published?
A Draft regulations are available here. The final version
of the regulations will be published after Royal Assent
on the HMSO internet
site as usual.
Share schemes
Q What does Clause 1 and 2 do?
A Clauses 1 and 2 extend employers' ability to recover Class 1 primary
National Insurance Contributions (NICs) paid on behalf of their employees
and ex-employees on securities based earnings. They allow the employer,
with the agreement of the employee, to withhold an amount of securities
equal to the value of the employees NICs paid on their behalf.
The employer can recover by this method in the year that the gain arises
for current employees, in the year of cessation and the year following
cessation for ex-employees. These changes will be made by amending both
primary and secondary legislation. Regulations will be introduced to specify
how the agreements can be entered into and the types of earnings that
can be included.
Q Can I ask employees to enter into these agreements
now?
A No. Currently these agreements can only be made with employees in the
year that they cease working for you. For employees who receive the gain
before cessation (but in the year of cessation) these agreements are limited
to situations when the NICs cannot be recovered from cash earnings.
Q Once the bill becomes an act can I ask employees
to enter into these agreements?
A You will be able to enter into these agreements once the bill receives
Royal Assent, and the Clauses are given effect by a treasury commencement
order and the necessary supporting Regulations are in force. These will
be laid before Parliament following Royal Assent. The Clauses are currently
drafted to allow employers to enter into agreements with their employees
any time up to the day that the security based remuneration is paid.
Q Can I ask my employees to enter into the new Joint NIC Agreements
and Elections now?
A No. Currently there is no statutory provision to allow employers and
employees to either make the new Agreements or Elections for restricted
and convertible securities. However, you can make Agreements and Elections
for employment related securities options (previously just share options),
including Long Term Incentive Plans. For further information see Transferring
Employers (secondary) National Insurance contributions (NICs) to Employees
- Agreements and Joint NICs Elections.
Q Once the Bill becomes an Act can I ask my employees to enter
into the new Joint NIC Agreements and Elections for securities already
awarded?
A Yes, after the Bill receives Royal Assent, and the Clauses are given
effect by a Treasury commencement order and the necessary supporting
Regulations are in force. The Clauses as currently drafted will allow
employers and employees to jointly make Elections and Agreements for
restricted or convertible securities already awarded. However, the terms
of the Elections and Agreements cannot be applied to any employment
income that has already arisen from those securities and treated as
earnings before the Election or Agreement is made.
Q Will the employees who agree to pay the employers
NIC liability, either through an Agreement or an Election,
obtain Income Tax relief?
A Yes, we propose to include a measure in the Finance Bill 2004 for employees
who bear the employer's NIC liability, either under an Agreement or an
Election, to get Income Tax relief for the amount of employer's secondary
NIC paid by them. The provisions are likely to operate in the same way
as the Income Tax relief currently provided for the employee's payment
of secondary NIC on gains from securities options.
Q Will the Inland Revenue provide model Joint
NIC elections and guidance on their website?
A Yes. We will provide model Joint
NIC Elections and guidance on the website. As most
of the requirements for the new Elections are similar
to the Elections for securities options, the existing
models will be amended to cater for applications to
restricted and convertible securities.
Q As an employing company I can get Corporation
Tax relief for the restricted and convertible securities
acquired by my employees. Will that relief be affected
if they agree to pay the secondary employers NIC liability
on these securities?
A Along with a proposal to provide for Income Tax relief, we propose to
make a consequential amendment to Schedule 23 Finance Act 2003. This is
to ensure the Corporation Tax relief for employee share acquisition is
available as originally provided and will not be affected by the employee
getting income tax relief for those securities.
Q Can an Election or Agreement be entered into
where the employment income would be charged to income
tax under Chapters 3A or 3B?
A Chapters 3A and 3B in Part 7 of ITEPA are anti-avoidance provisions
and, therefore, the proposed extension of the NIC Agreements and Elections
to employment related securities will not be applicable to employment
income that arises by virtue of those chapters.
|
