Clause 16 - Repeal of certain redundant reliefs relating to Class 4 contributions

Part of National Insurance Contributions Bill – in a Public Bill Committee am 3:15 pm ar 21 Tachwedd 2013.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of David Gauke David Gauke The Exchequer Secretary 3:15, 21 Tachwedd 2013

There is not a lot to say on this clause. I could, of course, say a lot, but I am not inclined to.

Clause 16 will repeal two redundant class 4 national insurance contributions reliefs. As I am on my feet, I am sure the Committee will be keen to know what they are.

The first is the repeal of paragraph 3(3) of schedule 2 to the Social Security Contributions and Benefits Act 1992 and its Northern Ireland equivalent. It is an obsolete provision that dates from the introduction of independent  taxation of spouses from 1990-91. Changes were made for 1990-91 onwards, so that only the losses of the self-employed person, and not their spouse, could be deducted for the purposes of calculating profits on which class 4 NICs are payable.

Paragraph 3(3) of schedule 2 to the 1992 Acts provides that any losses incurred under the previous rules could be carried forward and used against the class 4 NICs liability. The relief was a transitional provision, which the Office of Tax Simplification, in its review of reliefs, identified as no longer necessary and should be repealed.

The second repeal is that of paragraph 9 of schedule 2 to the 1992 Acts. This is another obsolete relief that provides that where a husband or wife has elected to be assessed separately for income tax purposes or a husband and wife have jointly elected that the wife’s earned income should be taxed as though she was a single person, the election is to operate for class 4 NICs purposes only. The effect was that wives would be assessed on their own class 4 income and would pay an appropriate contribution. Where an application has not been made for separate assessment or an election for the separate taxation of a wife’s earnings, the husband will be liable to pay any class 4 contributions due in respect of his wife’s income. The aggregation of income, which treated the income of a woman living with her husband as his income for income tax purposes, was abolished with effect from the tax year 1990-91 onwards, so the relief is redundant and is to be repealed.