Question proposed, That the clause stand part of the Bill.

The early departure payments scheme is operated by the Ministry of Defence and provides a framework for making payments to qualifying service personnel who leave the armed forces between the age of 40 and the pension age for MOD personnel specified in the armed forces pension scheme, provided that they have sufficient years of service in the forces.

The EDPs came into existence on 6 April 2005. At that time, there was no liability for national insurance contributions. It has been the intention of successive Governments since the introduction of EDPs not to subject them to class 1 national insurance contributions. However, because of an interaction with the changes to the taxation of pensions in 2006, and the MOD providing further information on the nature of EDPs, such payments have been liable for class 1 NICs since the start of the 2005-06 tax year.

Clause 16 will provide for payments made under the Armed Forces Early Departure Payments Scheme Order 2005 to be disregarded for NICs purposes for the tax years 2005-06 to 2012-13 inclusive.

Question put and agreed to.

Clause 15 accordingly ordered to stand part of the Bill.