Statutory Instrument 2001 No. 1004

The Social Security (Contributions) Regulations 2001

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© Crown Copyright 2001

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(a) the Social Security (Contributions) (Amendment No. 2) Regulations 2001[3];

(b) the Social Security (Contributions) (Amendment No. 2) (Northern Ireland) Regulations 2001[4];

(c) the Social Security (Contributions) (Amendment No. 3) Regulations 2001[5];

(d) the Social Security (Contributions) (Amendment No. 3) (Northern Ireland) Regulations 2001[6];

(e) the Social Security (Crediting and Treatment of Contributions, and National Insurance Numbers) Regulations 2001)[7]; and

(f) the Social Security (Crediting and Treatment of Contributions, and National Insurance Numbers) Regulations (Northern Ireland) 2001[8].

    (2) In these Regulations, unless the context otherwise requires - 

"the Act" means the Social Security Contributions and Benefits Act 1992[9];

"the Administration Act" means the Social Security Administration Act 1992[10];

"aggregation" means the aggregating and treating as a single payment under paragraph 1(1) of Schedule 1 to the Act (Class 1 contributions; more than one employment) of two or more payments or earnings and "aggregated" shall be construed accordingly;

"apportionment" means the apportioning under paragraph 1(7) of Schedule 1 to the Act to one or more employers of a single payment of earnings made to or for the benefit of an employed earner in respect of two or more employments, or, as the case may be, the apportioning under paragraph 1(8) of that Schedule of contribution liability between two or more employers in respect of earnings which have been aggregated under paragraph 1(1)(b) of that Schedule, and in either case "apportioning" and "apportioned" shall be construed accordingly;

"the Board" means the Commissioners of Inland Revenue, and subject to section 4A of the Inland Revenue Regulation Act 1890[11], includes any officer or servant of theirs;

"cash voucher" has the meaning given to it in section 143 of the Taxes Act (cash voucher taxable under PAYE[12];

"company" means a company within the meaning of section 735 of the Companies Act 1985[13] or a body corporate to which, by virtue of section 718 of that Act, any provision of that Act applies;

"COMPS employment" means employment in respect of which minimum payments are made to a money purchase pension scheme contracted out under section 9(3) of the Pensions Act[14];

"conditional interest in shares" means an interest which is conditional for the purposes of sections 140A and 140B of the Taxes Act[15];

"contracted-out employment" has the same meaning as in section 8(1) of the Pensions Act[16];

"contracted-out rate" means, in relation to Class 1 contributions payable in respect of earnings paid to or for the benefit of an earner who is in - 

(a) COSRS employment, the reduced amount for the time being applying in accordance with section 41(1) to (1B)[17] of the Pensions Act (which specifies the percentage reduction of primary and secondary Class 1 contribution in respect of that part of an employed earner's earnings which exceed the current lower earnings limit, but not the current upper earnings limit, in respect of members of a COSRS);

(b) COMPS employment, the reduced amount for the time being applying in accordance with section 42A(1) to (2A) of the Pensions Act (which specifies the percentage reduction of primary and secondary Class 1 contributions in respect of that part of an employed earner's earnings which exceed the current lower earnings limit, but not the current upper earnings limit, in respect of members of a COMPS)[18];

"contribution week" means a period of seven days beginning with midnight between Saturday and Sunday;

"contribution year" shall be construed in accordance with section 12(1) or (as the case requires) section 13(5) of the Act (late paid Class 2 or Class 3 contributions);

"a contribution-based jobseeker's allowance" has the same meaning as in the Jobseekers Act 1995[19];

"contributory benefit" includes a contribution-based jobseeker's allowance but not an income-based jobseeker's allowance;

"convertible shares" means shares which are convertible within the meaning of section 140D of the Taxes Act;

"COSRS employment" means employment which qualifies an earner for a pension provided by a salary related scheme contracted out under section 9(2) of the Pensions Act[20];

"director" means - 

(a) in relation to a company whose affairs are managed by a board of directors or similar body, a member of that board or similar body;

(b) in relation to a company whose affairs are managed by a single director or similar person, that director or person; and

(c) any person in accordance with whose directions or instructions the company's directors as defined in paragraphs (a) and (b) above are accustomed to act; and for this purpose a person is not to be treated as such a person by reason only that the directors act on advice given by him in his professional capacity;

"due date" in Part 6 means in relation to any contribution which a person is - 

(a) liable to pay, the date by which payment falls to be made;

(b) entitled but not liable to pay, the date 42 days after the end of the year in respect of which it is paid;

"earnings period" means the period referred to in regulation 2;

"earnings-related contributions" means contributions payable under the Act in respect of earnings paid to or for the benefit of an earner in respect of employed earner's employment;

"electronic communications" includes any communications by means of a telecommunications system (within the meaning of the Telecommunications Act 1984[21], and a means of electronic communications, or a form of such communication, is approved if it is for the time being approved by the Board;

"an income-based jobseeker's allowance" has the same meaning as in the Jobseekers Act 1995;

"income tax month" has the meaning given in paragraph 1(2) of Schedule 4;

"month" means an income tax month;

"national insurance number" means the national insurance number allocated within the meaning of regulation 9 of the Social Security (Crediting and Treatment of Contributions, and National Insurance Numbers) Regulations 2001;

"non-cash voucher" has the meaning given in section 141(7) of the Taxes Act;

"non-contracted-out employment" means employed earner's employment which is not contracted-out employment;

"non-contracted-out rate" means, in relation to Class 1 contributions payable in respect of earnings paid to or for the benefit of an earner in non-contracted-out employment, the primary percentage for the time being specified in section 8(2) of the Act[22];

"normal rate" means the amount of a Class 1 contribution which would be payable in respect of earnings paid to or for the benefit of an employed earner in any week if the employment were not contracted-out employment;

"the Pensions Act" means the Pension Schemes Act 1993[23];

"profits or gains" for the purposes of Part 8 means profits or gains which, subject to the provisions of Schedule 2 to the Act, are chargeable to income tax under Case I or Case II of Schedule D;

"readily convertible asset" has the meaning given in section 203F of the Taxes Act[24] but this is subject to paragraph 128(2) of Schedule 8 to the Finance Act 2000 (approved employee share ownership plans: meaning of readily convertible asset)[25];

"regular interval" for the purposes of regulations 3, 4 and 7 includes only such interval as is in accordance with an express or implied agreement between the employed earner and the secondary contributor as to the intervals at which payments of earnings normally fall to be made, being intervals of substantially equal length;

"retirement benefits scheme" has the meaning given in section 611 of the Taxes Act[26];

"Schedule E" means the Schedule so referred to in the Taxes Act;

"secondary contributor" means the person who, in respect of earnings from employed earner's employment, is liable to pay a second Class 1 contribution under section 6(4)(b) of the Act (liability for Class 1 contributions)[27];

"serving member of the forces" means a person, other than one mentioned in Part 2 of Schedule 6, who, being over the age of 16, is a member of any establishment or organisation specified in Part I of that Schedule (being a member who gives full pay service) but does not include any such person while absent on desertion;

"the Taxes Act" means the Income and Corporation Taxes Act 1988[28];

"training" means full-time training at a course approved by the Board;

"the Transfer Act" means the Social Security Contributions (Transfer of Functions, etc.) Act 1999;

"week" means tax week, except in relation to Case C of Part 9, where "week" and "weekly" have the meanings given in regulation 115;

"the Welfare Reform Act" means the Welfare Reform and Pensions Act 1999[29];

"year" means tax year;

"year of assessment" has the meaning given to it in section 832(1) of the Taxes Act;

    (3) For the purposes of regulations 52, 57, 67 and 116, references to "contributions", "Class 1 contributions" and "earnings-related contributions" shall, unless the context otherwise requires, include any amount paid on account of earnings-related contributions in accordance with regulation 8(6).

    (4) Where, by any provision of these Regulations - 

(a) any notice or other document is required to be given or sent to the Board, that notice or document shall be treated as having been given or sent on the day that it is received by the Board; and

(b) any notice or other document is required to be given or sent by the Board to any person, that notice or document shall, if sent by post to that person's last known address, be treated as having been given or sent on the day that is was posted.

    (5) Unless the context otherwise requires - 

(a) any reference in these Regulations to a numbered regulation is a reference to the regulation bearing that number in these Regulations;

(b) any reference in these Regulations to a numbered Part or Schedule is to the Part of, or Schedule to, these Regulations bearing that number;

(c) any reference in a regulation or a Schedule to a numbered paragraph is a reference to the paragraph bearing that number in that regulation or Schedule;

(d) any reference in a paragraph of a regulation or a Schedule to a numbered or lettered sub-paragraph is a reference to the sub-paragraph bearing that number or letter in that paragraph; and

(e) any reference in a sub-paragraph to a numbered head is a reference to the head in that sub-paragraph bearing that number.

Earnings period for earnings normally paid otherwise than at regular intervals and not treated as paid at regular intervals
     4. Subject to regulation 3(5) or regulation 5, where earnings are paid to or for the benefit of an earner in respect of an employed earner's employment, but no part of those earnings is normally paid or treated under regulation 7 as paid at regular intervals, the earnings period in respect of those earnings shall be a period of one of the following lengths - 

(a) the length of the period of that part of the employment for which the earnings are paid or a week, whichever is the longer; or

(b) where it is not reasonably practicable to determine that period under paragraph (a) - 


(i) the length of the period from the date on which the last payment of earnings, before the payment in question, was paid during the employment in respect of the employment (or, if there has been no such payment, from the date on which the employment began) to the date of the payment in question, unless the period so calculated would be of a length less than that of a week, in which case the earnings period shall be a week, or

(ii) where the payment is made before the employment begins or after it ends, a week.

Earnings period for sums deemed to be earnings by virtue of regulations made under section 112 of the Act
     5. Where any sum or amount is deemed to be earnings by virtue of any regulations made under section 112 of the Act (sums to be earnings for the purposes of Part I to V of the Act)[31] - 

(a) the earnings period in respect of any payment of those earnings shall be the length of the protected period (as referred to in section 189 of the Trade Union and Labour Relations (Consolidation) Act 1992[32]) or, as the case may be, that part of it in respect of which the sum is paid, or a week whichever is the longer;

(b) contributions paid in respect of such earnings shall, if the employed earner so requests - 


(i) if the period to which the payment of earnings relates falls wholly in a year other than the year in which they are paid, be treated as paid in respect of the year in which the period to which the payment of earnings relates falls, or

(ii) if the period to which the payment of earnings relates falls partly in the year in which they are paid and partly in one or more other years, be treated as paid proportionately in respect of each of the years in which the period to which the payment of earnings relates falls, or

(iii) if the period to which the payment of earnings relates falls wholly in two or more years other than the year in which they are paid, be treated as paid proportionately in respect of each of the years in which the period to which the payment of earnings relates falls.

Earnings period for earnings to be aggregated where the earnings periods for those earnings otherwise would be of different lengths
     6.  - (1) Paragraphs (2) and (3) apply where - 

(a) earnings paid in respect of two or more employed earner's employments fall to be aggregated; and

(b) the earnings periods in respect of those earnings are, by virtue of regulation 3, 4 or 5, of different lengths.

    (2) In a case to which this regulation applies, where (but for its provisions) the earnings period in respect of earnings derived from any of the employments is of a different length from the designated earnings period, the earnings period in respect of any payment of those earnings shall be the designated earnings period.

    (3) In this regulation "the designated earnings period" means - 

(a) where the earnings are derived from employments which include any contracted-out employment and any non-contracted-out employment and the employed earner is a person in respect of whom minimum contributions are paid by the Board in accordance with section 43 of the Pensions Act (payment of minimum contributions to personal pension schemes)[33], the earnings period in respect of earnings which are derived from such non-contracted-out employment or, if there is more than one such employment, the shorter, or as the case may be the shortest, of the earnings periods derived from such employments; or

(b) where the earnings are derived from employments which include any contracted-out employment and any non-contracted-out employment and the employed earner is not a person in respect of whom minimum contributions are paid by the Board in accordance with section 43 of the Pensions Act, and - 


(i) any of the contracted-out employments is COMPS employment, the earnings period in respect of the earnings derived from that COMPS employment or, if there is more than one such employment, the shorter, or as the case may be the shortest, of the earnings periods derived from such employments,

(ii) the contracted-out employment is COSRS employment only, the earnings period in respect of the earnings derived from that COSRS employment or, if there is more than one such employment, the shorter, or (as the case may be) the shortest, of the earnings periods derived from such employments, or



(c) where the earnings are derived from employments which are contracted-out employment only and - 



(i) any of the employments is COMPS employment, the earnings period in respect of the earnings derived from that COMPS employment or, if there is more than one such employment, the shorter, or as the case may be the shortest, of the earnings periods derived from such employments,

(ii) all of those employments are COSRS employment, the shorter or shortest of the earnings periods derived from such employments, and



(d) in any other case, the shorter or shortest of the earnings periods in respect of the earnings derived from the employments.

Treatment of earnings paid otherwise than at regular intervals
     7.  - (1) Subject to regulation 3(5) and paragraphs (2) and (3), for the purposes of assessing earnings-related contributions - 

(a) if on any occasion a payment of earnings which would normally fall to be made at regular interval is made otherwise than at the regular interval, it shall be treated as if it were a payment made at that regular interval;

(b) if payments of earnings are made at irregular intervals which secure that one and only one payment is made in each of a succession of periods consisting of the same number of days, weeks or calendar months, those payments shall be treated as if they were payments made at the regular interval of one of those periods of days, weeks or, as the case may be, calendar months;

(c) if payments of earnings, other than those specified in sub-paragraph (b), are made in respect of regular intervals, but otherwise than at regular intervals, each such payment shall be treated as made at the regular interval in respect of which it is due.

    (2) Where under paragraph (1) a payment of earnings is treated as made at a regular interval, it shall for the purposes of assessment under these regulations of earnings-related contributions also be treated as paid - 

(a) in a case falling within paragraph (1)(a), on the date on which it would normally have fallen to be made;

(b) in any other case, on the last day of the regular interval at which it is treated as paid.

    (3) Paragraphs (1) and (2) shall not apply to a payment of earnings made in one year where by virtue of those paragraphs that payment would be treated as made in another year.

    (4) Notwithstanding regulation 15, a payment to which paragraph (3) applies ("the relevant payment") shall not be aggregated with any other earnings unless - 

(a) other earnings to which paragraphs (1) to (2) do not apply by virtue only of paragraph (3) are paid in the earnings period in which the relevant payment falls; and

(b) those other earnings would have been aggregated with the relevant payment had paragraph (3) not applied.

    (5) A relevant payment shall be aggregated only with the other earnings specified in paragraph (4).

Earnings periods for directors
     8.  - (1) Where a person is, or is appointed, or ceases to be a director of a company during any year the amount, if any, of earnings-related contributions payable in respect of earnings paid to or for the benefit of that person in respect of any employed earner's employment with that company shall, subject to regulations 12 and 14 to 17, be assessed on the amount of all such earnings paid (whether or not paid weekly) in the earnings periods specified in paragraphs (2) to (5).

    (2) Where on one or more than one occasion a person is appointed a director of a company during the course of a year the earnings period in respect of such earnings as are paid in so much of the year as remains in the period commencing with the week in which he is appointed or, as the case may be, first appointed shall be the number of weeks in that period.

    (3) Where a person is a director of a company at the beginning of a year the earnings period in respect of such earnings shall be that year, whether or not he remains such a director throughout that year.

    (4) Where the earnings paid in respect of two or more employed earner's employments fall to be aggregated and the earnings periods in respect of those earnings would be of different lengths, then - 

(a) if those periods are determined only by paragraphs (1) to (3); or

(b) if the length of one or more of those periods is determined by those paragraphs and the length of one or more of the others is determined by any other provision of these Regulations,

the earnings period in respect of all those earnings shall be the period determined by those paragraphs or, where there is more than one such period, the longer or longest period so determined.

    (5) Where a person is no longer a director of a company and, in any year after that in which he ceased to be a director of that company, he is paid earnings in respect of any period during which he was such a director, then - 

(a) notwithstanding regulation 15, those earnings shall not be aggregated with any other earnings with which they would otherwise fall to be aggregated; and

(b) the earnings period in respect of those earnings shall be the year in which they are paid.

    (6) Without prejudice to the paragraphs (1) to (5), a director and any company employing him may pay on account of any earnings-related contributions that may become payable by them such amounts as would be payable by way of such contributions if those paragraphs did not apply.

Earnings period for statutory maternity pay and statutory sick pay paid by the Board
     9.  - (1) In this regulation the expression "week" - 

(a) in paragraph (2)(a); and

(b) in paragraph (2)(b) where it first occurs,

has the same meaning as in section 171(1) of the Act.

    (2) If the Board make a payment of statutory maternity pay under regulations made under section 164(9)(b) of the Act (circumstances in which the Board are liable to pay statutory maternity pay)[34] - 

(a) a payment of statutory maternity pay for any week shall not be aggregated with any other earnings; and

(b) the earnings period for a payment of statutory maternity pay for any week, shall be a week.

    (3) If the Board make a payment of statutory sick pay under regulations made under section 151(6)[35] of the Act (circumstances in which the Board are liable to pay statutory sick pay), the earnings period for that payment shall be - 

(a) a period of the same length as the period in respect of which the payment is made, or

(b) a week,

whichever is the longer.

Earnings limits and thresholds
     10. For the purposes of section 5(1) of the Act (earnings limits and thresholds to be specified for each tax year in respect of Class 1 contributions), for the tax year which begins on 6th April 2001 - 

(a) the lower earnings limit (for primary Class 1 contributions) shall be £72;

(b) the upper earnings limit (for primary Class 1 contributions) shall be £575;

(c) the primary threshold (for primary Class 1 contributions) shall be £87; and

(d) the secondary threshold (for secondary Class 1 contributions) shall be £87.

Prescribed equivalents
     11.  - (1) The prescribed equivalents of the lower and upper earnings limits and the primary and secondary thresholds, for the purposes of - 

(a) sections 6(1), 6A(1), 8(1), and 9(1) of the Act (which provide liability for Class 1 contributions, notional payment of primary Class 1 contribution where earnings are not less than the lower earnings limit, the calculation of primary Class 1 contributions and the calculation of secondary Class 1 contributions respectively)[36]; and

(b) sections 41(1) and 42A(1) of the Pensions Act (reduced rates of Class 1 contributions and rebates[37],

shall be determined in accordance with paragraphs (2) to (5).

    (2) Subject to paragraphs (4) and (5), the prescribed equivalents of the lower and upper earnings limits shall be - 

(a) where the earnings period is a multiple of a week, the amounts calculated by multiplying the lower and upper earnings limits ("the weekly limits") by the corresponding multiple;

(b) where the earnings period is a month, the amounts calculated by multiplying each of the weekly limits by 4 1/3;

(c) where the earnings period is a multiple of a month, the amounts calculated by multiplying each of the weekly limits by 4 1/3 and multiplying each result by the corresponding multiple;

(d) in any other case, the amounts calculated by dividing each of the weekly limits by 7 and multiplying each result by the number of days in the earnings period concerned.

    (3) Subject to paragraphs (4) and (5), the prescribed equivalents of the primary and secondary thresholds shall be - 

(a) where the earnings period is a month, £378;

(b) where the earnings period is a year, £4,535;

(c) where the earnings period is a multiple of a week, the amount calculated by dividing the figure in sub-paragraph (b) by 52 and multiplying the result by the corresponding multiple;

(d) where the earnings period is a multiple of a month, the amount calculated by dividing the figure in sub-paragraph (b) by 12 and multiplying the result by the corresponding multiple;

(e) in any other case, the amount calculated by dividing the figure in sub-paragraph (b) by 365 and multiplying the result by the number of days in the earnings period concerned.

    (4) The amounts determined in accordance with paragraph (2)(b) and (c) and paragraph (3)(c) and (d) if not whole pounds, shall be rounded up to the next whole pound.

    (5) The amounts determined in accordance with paragraph (2)(d) and paragraph (3)(e) shall be calculated to the nearest penny, and any amount of a halfpenny or less shall be disregarded.

Calculation of earnings-related contributions
     12.  - (1) Subject to paragraphs (3) and (4), earnings-related contributions shall be calculated as follows - 

(a) primary and secondary Class 1 contributions under section 6 of the Act (liability for Class 1 contributions) and any primary and secondary Class 1 contributions at the normal rate and at the contracted-out rate shall each be calculated separately; and

(b) as regards the calculation referred to in sub-paragraph (a) primary and secondary Class 1 contributions shall be calculated to the nearest penny and any amount of a halfpenny or less shall be disregarded.

    (2) In the alternative, but subject to the provisions of paragraphs (3) to (5), the contributions specified in paragraph (1) may be calculated in accordance with the appropriate scale or, for contributions payable on earnings above the upper earnings limit or the prescribed equivalent of that limit, a contributions calculator prepared by the Board.

    (3) Where the amount of earnings to which - 

(a) the appropriate scale is to be applied does not appear in the scale, the amount of contributions payable shall be calculated by reference to the next smaller amount of earnings in the appropriate column in the scale;

(b) the appropriate contributions calculator is to be applied does not appear in the calculator, the amount of contributions payable shall be calculated - 


(i) by obtaining from the calculator the amounts of contributions payable on the largest components of the earnings provided for in the calculator, and

(ii) by adding together the amounts so obtained.

    (4) Where a scale or a contributions calculator would, but for the period to which it relates, be appropriate and the earnings period in question is a multiple of the period in the scale or, as the case may be, calculator, the scale or calculator shall be applied by dividing the earnings in question so as to obtain the equivalent earnings for the period to which the scale or calculator relates and - 

(a) in the case of the scale, by multiplying the amount of contributions shown in the scale as appropriate to those equivalent earnings by the same factor as the earnings were divided;

(b) in the case of the calculator, by multiplying the amount of contributions shown in the calculator as appropriate to those equivalent earnings or, where no equivalent earnings are shown, the amount of contributions calculated in accordance with paragraph (3)(b), by the same factor as the earnings were divided.

    (5) Unless the Board agree to the contrary, all the contributions payable in a year in respect of the earnings paid to or for the benefit of an earner in respect of his employed earner's employment or, where he has more than one such employment and the earnings from those employments are aggregated under paragraph 1(1) of Schedule 1 to the Act (Class 1 contributions where more than one employment), in respect of those employments, shall be calculated either in accordance with paragraph (1) or paragraph (2) but not partly in accordance with one and partly in accordance with the other of those paragraphs, save that the contributions calculator may also be used where the contributions have been calculated in accordance with paragraph (1).

General provisions as to aggregation
     13. Where on one or more occasions the whole or any part of a person's earnings in respect of employed earner's employment is not paid weekly (whether or not it is treated for the purpose of earnings-related contributions as paid weekly), paragraph 1 of Schedule 1 to the Act (Class 1 contributions where more than one employment) shall have effect as if for the references to "week" there were substituted references to "earnings period".

Aggregation of earnings paid in respect of separate employed earner's employments under the same employer
     14. For the purpose of earnings-related contributions, where an earner is concurrently employed in more than one employed earner's employment under the same employer, the earnings paid to or for the benefit of the earner in respect of those employments shall not be aggregated if such aggregation is not reasonably practicable because the earnings in the respective employment are separately calculated.

Aggregation of earnings paid in respect of different employed earner's employments by different persons and apportionment of contribution liability
     15.  - (1) Subject to regulation 7, for the purposes of determining whether earnings-related contributions are payable in respect of earnings paid to or for the benefit of an earner in a given earnings period, and, if so, the amount of contributions, where in that period earnings in respect of different employed earner's employments are paid to or for the benefit of the earner - 

(a) by different secondary contributors who in respect of those employments carry on business in association with each other;

(b) by different employers, one of whom is, by virtue of Schedule 3 to the Social Security (Categorisation of Earners) Regulations 1978[38], treated as the secondary contributor in respect of each of those employments; or

(c) by different persons, in respect of work performed for those persons by the earner in those employments and in respect of those earnings, some other person is, by virtue of that Schedule, treated as the secondary contributor,

the earnings paid in respect of each of the employments referred to in this paragraph shall, unless in a case falling under sub-paragraph (a) it is not reasonably practicable to do so, be aggregated and treated as a single payment of earnings in respect of one such employment.

    (2) Where, under paragraph (1), earnings are aggregated, liability for the secondary contributions payable in respect of those earnings shall, in a case falling within paragraph (1)(a), be apportioned between the secondary contributors in such proportions as they shall agree amongst themselves, or, in default of agreement, in the proportions which the earnings paid by each bearer to the total amount of the aggregated earnings.

Aggregation of earnings paid after pensionable age
     16. Notwithstanding the provisions of regulation 15, a payment of earnings to which regulation 28 applies shall not be aggregated with any other earnings.

Apportionment of single payment of earnings in respect of different employed earner's employments by different secondary contributors
     17. Where any single payment of earnings is made in respect of two or more employed earner's employments under different secondary contributions, liability for earnings-related contributions shall be determined by apportioning the payment as follows - 

(a) where the secondary contributors are, in respect of those employments, carrying on business in association with each other, to the secondary contributor who makes the payment;

(b) where the secondary contributors are not so carrying on business in association with each other, to each of those secondary contributors in the proportion which the earnings due in respect of that secondary contributor's employment bears to the total of the single payment.

Change of earnings period
     18.  - (1) Paragraphs (2) and (3) apply where, by reason of a change in the regular interval at which any part of an earner's earnings is paid or treated as paid in respect of employed earner's employment ("the regular interval of payment"), that person's earnings period in any employment or employments under the same secondary contributor is, or is in the process of being, changed.

    (2) Subject to paragraph (3), in relation to any payments made on or after the date of change the earnings period shall be determined in accordance with the new interval.

    (3) Where the new period is longer than the old period and during the first new period any payment has also been made at the old interval, the earnings-related contributions payable on any payment made on or after the date of change shall not exceed in amount the total which would have been payable if all the payments during the new period had been made at the new interval.

    (4) In this regulation - 

(a) the regular interval of payment which has been discontinued is referred to as "the old interval" and the interval which has, or is to, become the regular interval of payment is referred to as "the new interval";

(b) the earnings period determined according to the old interval is referred to as "the old period" and that determined according to the new interval is referred to as "the new period";

(c) reference to payment means payment of earnings actually made or, as the case may be, treated under regulation 7 as made, at an interval or date; and

(d) "date of change" means the date on which the first payment of earnings at the new interval is made.

Holiday payments
     19. Where as respects an employed earner's employment in which the earner is paid or would, but for paragraph (b), be treated under regulation 7 as paid at a regular interval of a week or a fixed number of weeks, a payment of earnings includes or comprises a payment in respect of a period of holiday entitlement other than such a payment made to an earner in respect of a period of holiday entitlement outstanding on termination of that employment, for the purposes of calculating the earnings-related contributions payable in respect of that payment of earnings - 

(a) the earnings period may be the length of the period in respect of which the payment is made, but where the length of that earnings period includes a fraction of a week that fraction shall be treated as a whole week; and

(b) where the earnings period is so determined, regulation 7 shall not apply.

Joint employment of husband and wife
     20. For the purposes of earnings-related contributions, where a husband and wife are jointly employed in employed earner's employment and earnings in respect of the employment are paid to them jointly, the amount of the earnings of each shall be calculated upon the same basis as that upon which those earnings are calculated for the purposes of income tax and, in the absence of such calculation, upon such basis as may be approved by the Board.

Annual maximum
     21. Subject to section 12 of the Act (late paid Class 2 contributions)[39] and regulations 63 to 65, for the purposes of section 19(1) and (2) of the Act (power to prescribe maximum amounts of contributions and repayment of excess), where an earner is employed in more than one employment but without prejudice to the earner's liability in the first instance for the full amounts payable apart from this regulation, liability in any year for primary Class 1 contributions, or, where both Class 1 and Class 2 contributions are payable by an earner in any year, for both primary Class 1 contributions and Class 2 contributions, shall not exceed an amount equal to 53 primary Class 1 contributions at the primary percentage payable on earnings at the upper earnings limit for that year.

Payment to be treated as earnings
     22.  - (1) For the purposes of section 3 of the Act (earnings)[40], the amounts specified in paragraphs (2) to (4) shall be treated as remuneration derived from an employed earner's employment.

    (2) The amount specified in this paragraph is the amount of any payment by a company to or for the benefit of any of its directors if - 

(a) apart from this regulation the payment would, when made, not be earnings for the purposes of the Act; and

(b) the payment is made on account of or by way of an advance on a sum which would be earnings for those purposes.

    (3) The amount specified in this paragraph is any amount in respect of which an employed earner is chargeable to income tax under Schedule E under any provision of sections 140A to 140H of the Taxes Act (conditional acquisition of shares and convertible shares) in respect of the acquisition, on or after 9th April 1998, of shares or an interest in shares.

    (4) The amount specified in this paragraph is any amount in respect of which - 

(a) an employed earner is chargeable to income tax under Schedule E under any provision of Part X of Schedule 8 to the Finance Act 2000 (employee share ownership plans - income tax)[41]; and

(b) income tax is deductible under regulations made under section 203 of the Taxes Act (PAYE Regulations).

Manner of making sickness payments treated as remuneration
     23. Where by virtue of section 4(1) of the Act (payments treated as remuneration and earnings) a sickness payment is treated as remuneration derived from an employed earner's employment, that payment shall be made through the person who is the secondary contributor in relation to the employment concerned except where - 

(a) the payment is payable by another person;

(b) that person has agreed with the secondary contributor to make the payment; and

(c) arrangements have been made between them for the person who has agreed to make the payment to furnish the secondary contributor with the information specified in paragraph 3(5)(a) of Schedule 4 (intermediate employers).

Calculation of earnings for the purposes of earnings-related contributions
     24. For the purpose of determining the amount of earnings-related contributions, the amount of a person's earnings from employed earner's employment shall be calculated on the basis of his gross earnings from the employment or employments in question.

This is subject to the provisions of Schedule 2 (calculation of earnings for the purposes of earnings-related contributions in particular cases) and Schedule 3 (payments to be disregarded in the calculation of earnings for the purposes of earnings-related contributions).

Payments to be disregarded in the calculation of earnings for the purposes of earnings-related contributions
     25. Schedule 3 specifies payments which are to be disregarded in the calculation of earnings from employed earner's employment for the purpose of earnings-related contributions.

Certain payments by trustees to be disregarded
     26.  - (1) For the purposes of earnings-related contributions, there shall be excluded from the calculation of a person's earnings in respect of any employed earner's employment any payment, or any part of a payment - 

(a) which is made by trustees before 6th April 1990;

(b) the amount of which is or may be dependent upon the exercise by the trustees of a discretion or the performance by them of a duty arising under the trust;

(c) not being a sickness payment which by virtue of section 4(1) of the Act (payments treated as remuneration and earnings) is treated as remuneration derived from an employed earner's employment,

and in respect of which either paragraph (2) or (3) is satisfied.

    (2) This paragraph is satisfied if the trust, under which the payment is made, was created before 6th April 1985.

    (3) This paragraph is satisfied if - 

(a) the trust, under which the payment is made, was created on or after 6th April 1985;

(b) that trust took effect immediately on the termination of a trust created before 6th April 1985;

(c) the person to whom the payment is made either - 


(i) was a beneficiary under the earlier trust, or

(ii) would have been such a beneficiary if, while the earlier trust was subsisting, he had held the employment in respect of which the payment is made; and



(d) there were or are payments under the earlier trust which in the case of payments made on or after 6th October 1987, are payments made in circumstances to which sub-paragraphs (a), (b) and (c) apply.

Payments to directors which are to be disregarded
     27.  - (1) For the purposes of earnings-related contributions, there shall be excluded from the calculation of a person's earnings any payment in so far as it is a payment - 

(a) by a company;

(b) to or for the benefit of a director of that company;

(c) in respect of any employed earner's employment of that director with that company; and

(d) in respect of which paragraph (2), (3) or (4) is satisfied.

    (2) This paragraph is satisfied if - 

(a) the director is a partner in a firm carrying on a profession;

(b) being a director of a company is a normal incident of membership of that profession and of membership of the firm of the director;

(c) the director is required by the terms of his partnership to account to his firm for the payment; and

(d) the payment forms an insubstantial part of that firm's gross returns.

    (3) This paragraph is satisfied if - 

(a) the director was appointed to that office by a company having the right to do so by virtue of its shareholding in, or an agreement with, the company making the payment;

(b) by virtue of an agreement with the company that appointed him, the director is required to account for the payment to that company; and

(c) the payment forms part of the profits brought into charge to corporation tax or income tax of the company that appointed the director.

    (4) This paragraph is satisfied if - 

(a) the director was appointed to that office by a company other than the company making the payment;

(b) by virtue of an agreement with the company that appointed him, the director is required to account for the payment to that company;

(c) the payment forms part of the profits brought into charge to corporation tax of the company that appointed the director; and

(d) the company that appointed the director is not one over which - 


(i) the director has, or

(ii) any person connected with the director has, or

(iii) the director and any persons connected with him together have,



control.

    (5) In this regulation - 

(a) "company" has the meaning given by section 832(1) and (2) of the Taxes Act (interpretation of the Tax Acts);

(b) "the director" means the director to or for the benefit of whom the payment referred to in paragraph (1) is made; and

(c) in paragraph (4)(d) - 


(i) "control" has the same meaning as in section 840 of the Taxes Act,

(ii) "any person connected with the director" means any of the following, namely the spouse, parent, child, son-in-law or daughter-in-law of the director.

Liability for Class 1 contributions in respect of earnings normally paid after pensionable age
     28. Where in the year in which an earner attains pensionable age a payment of earnings is made to or for his benefit before the date he reaches pensionable age, and those earnings would normally fall to be paid in a year following that year, he shall be excepted from liability for primary Class 1 contributions payable in respect of those earnings.

Liability for Class 1 contributions of persons over pensionable age
     29. If - 

(a) earnings are paid to or for the benefit of an earner after he attains pensionable age; and

(b) those earnings would normally fall to be paid before the date on which he reaches pensionable age,

section 6(3) of the Act (liability for Class 1 contributions)[42] shall not operate to except him from liability for primary Class 1 contributions in respect of those earnings.

Abnormal pay practices
     30.  - (1) This regulation shall not apply for the purpose of any decision of an authorised officer of the Board in so far as that decision relates to contributions based on payments made more than one year before the beginning of the year in which that decision is given.

    (2) With a view to securing that liability for the payment of earnings-related contributions is not avoided or reduced by a secondary contributor following any practice, in the payment of earnings, which is abnormal for the employment in respect of which the earnings are paid ("an abnormal pay practice"), an authorised officer of the Board may, if he thinks fit, determine any question relating to a person's earnings-related contributions where any such practice has been or is being followed, as if the secondary contributor concerned had not followed any abnormal pay practice, but had followed a practice or practices normal for the employment in question.

    (3) With the view mentioned in paragraph (2), an authorised officer of the Board, in any case in which he has reason to believe that any abnormal pay practice has been or is being followed, may determine any such question, if he is satisfied that it ought properly to be so determined, as if application had been duly made to him for its determination.

Practices avoiding or reducing liability
     31. The Board may, where they are satisfied as to the existence of any practice in respect of the payment of earnings whereby the incidence of earnings-related contributions is avoided or reduced by means of irregular or unequal payments, give directions for securing that such contributions are payable as if that practice were not followed.

The provision of this regulation does not limit the operation of regulation 30.

Class 1A contributions payable where two or more cars are made available concurrently
     34.  - (1) This regulation applies where the amount of any Class 1A contribution payable for any year does not reflect a reduction in the cash equivalent of the benefit of the car as provided for by paragraph 2 of Schedule 6 to the Taxes Act, because of the application of paragraph 4 of that Schedule (modified reduction in cash equivalent where two or more cars are made available concurrently).

    (2) Except in the circumstances specified in paragraph (3), where paragraph (1) applies the amount of any Class 1A contribution payable for that year by the person liable to pay such contribution shall be equal to the amount which would have been payable if paragraph 4 had been omitted from Schedule 6 to the Taxes Act.

    (3) For the purposes of paragraph (2), the circumstances are that two or more cars are made available for private use by reason of - 

(a) any one employed earner's employment;

(b) two or more employed earner's employments under the same employer; or

(c) two or more employed earner's employments under different employers who are associated.

    (4) For the purposes of this regulation - 

(a) two or more employers shall be treated as associated if - 


(i) they are carrying on business in association, or

(ii) one has control of the other or others, or any person has control of both or all of them;



(b) references to an employer ("the first employer") having control of another employer ("the second employer") shall be construed as references to the first employer having control of the second employer either by himself or in conjunction with any person having control over the first employer;

(c) "control" means, except in relation to an employer which is a partnership, power to secure that the affairs of the employer are conducted in accordance with the wishes of the person concerned being, in relation to an employer which is a body corporate, power exercisable - 



(i) by means of the holding of shares or the possession of voting power in or in relation to that or any other employer, or

(ii) by virtue of any powers conferred by the articles of association or other document regulating that or any other employer;



(d) "control" means, in relation to any employer which is a partnership, having the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership.

Reduction of certain Class 1A contributions in the case of a car provided or made available by reason of two or more employments or to two or more employed earners
     35.  - (1) This regulation applies if - 

(a) a car is provided or made available to an employed earner by reason of two or more employed earner's employments, whether under the same employer or different employers; or

(b) a car is provided or made available to two or more employed earners concurrently by reason of their respective employed earner's employments under the same employer,

and all of those employed earner's employments are employments to which Chapter II of Part V of the Taxes Act applies.

    (2) If this regulation applies - 

(a) the amount of any Class 1A contribution which would be payable for the year by the person liable to pay such contribution shall, in the circumstances described in paragraph (3)(a), be so reduced as to equal the amount which would have been payable on the assumption mentioned in paragraph (3)(a);

(b) the amount of any Class 1A contribution which would be payable for the year by the person liable to pay such contribution shall, in the circumstances described in paragraph (3)(b), be so reduced as to equal the amount which would have been payable on the assumption mentioned in paragraph (3)(b).

    (3) For the purposes of - 

(a) paragraph (2)(a), the circumstances are that the aggregate use of the car for business travel in all the employed earner's employments concerned is not less than 18,000 miles (or such lower figure as would be applicable by virtue of paragraph 3(a) of Schedule 6 to the Taxes Act (reduction for periods when the car was unavailable for use) by reason of the car being unavailable within the meaning of paragraph 9 of that Schedule) and the assumption is that in each of those employments the car was used for business travel for at least 18,000 miles (or such lower figure as would be applicable by virtue of paragraph 3(a) of that Schedule);

(b) paragraph (2)(b), the circumstances are that the aggregate use of the car for business travel in all the employed earner's employments concerned is more than 2,500 miles but less than 18,000 miles (or such lower figures as would be applicable by virtue of paragraph 3 of Schedule 6 to the Taxes Act (reduction for periods of unavailability) by reason of the car being unavailable within the meaning of paragraph 9 of that Schedule) and the assumption is that in each of those employments the car was used for business travel for more than 2,500 miles but less than 18,000 miles (or such lower figures as would be applicable by virtue of paragraph 3 of that Schedule).

Reduction of certain Class 1A contributions on account of the number of employments in the cases of something provided or made available by reason of two or more employments and of something provided or made available to two or more employed earners
     36.  - (1) This regulation applies if something is provided or made available - 

(a) an employed earner by reason of two or more employed earner's employments, whether under the same employer or different employers; or

(b) two or more employed earners concurrently by reason of their respective employed earner's employments under the same employer,

and all of those employed earner's employments are employments to which Chapter II of Part V of the Taxes Act applies.

    (2) If this regulation applies the amount of any Class 1A contribution payable for the year by the person liable to pay such contribution shall be reduced (or, where regulation 35 applies, shall be further reduced) by deducting from that amount an amount equal to the fraction - 

Reduction of certain Class 1A contributions in respect of cars made available to disabled employed earners
     37.  - (1) This paragraph applies if a car is made available by reason of his employment and on account of his disability for purposes of, or purposes which include, assisting, on account of his disability, his travelling between his home and his place of employment.

    (2) Where paragraph (1) applies, the amount of any Class 1A contribution which would be payable for the year by the person liable to pay such contribution shall in the circumstance described in paragraph (3) or (4), be reduced so as to equal the amount which would have been payable if the employed earner's travelling between his home and place of employment were business travel.

    (3) The circumstance is that treating the private use of the car by the employed earner in travelling between his home and his place of employment as business travel would increase the use of the employed earner's business travel to an amount of not less than 18,000 miles (or such lesser figure as is applicable by virtue of paragraph 3(a) of Schedule 6 to the Taxes Act (reductions for periods when car unavailable for use)).

    (4) The circumstance is that treating the private use of the car by the employed earner in travelling between his home and his place of employment as business travel would increase the use of the car for the employed earner's business travel to an amount of not less than 2,500 miles but less than 18,000 miles (or such lesser figure as is applicable by virtue of paragraph 3(a) and (b) of Schedule 6 to the Taxes Act.

    (5) In this regulation and regulation 38 "disabled", in relation to a person, means that the person suffers from some permanent handicap resulting from an illness, injury or congenital condition, and "disability" shall be construed accordingly.

Exception from liability to pay Class 1 contributions in respect of cars made available to disabled employed earners only for business and home to work travel
     38.  - (1) If the conditions mentioned in paragraphs (2) to (5) are satisfied, the person who would otherwise be liable to pay the Class 1A contribution for that year in respect of the employer earner and the car mentioned in those paragraphs shall be excepted from that liability.

    (2) The first condition is that the car is made available to an earner who is disabled.

    (3) The second condition is that the car is made available to the earner by reason of his employment.

    (4) The third condition is that the car is made available account of the earner's disability for the purposes of, or for purposes which include assisting, the earner's travelling between the earner's home and place of employment.

    (5) The fourth condition is that the terms on which the car is made available to the earner prohibit private use other than - 

(a) by the earner to whom it is made available; and

(b) in travelling between the earner's home and place of employment.

    (6) The fifth condition is that no prohibited private use of the car has been made in the year.

Calculation of Class 1A contributions
     39. Where a person is liable to pay a Class 1A contribution in accordance with section 10 of the Act (Class 1A contributions: benefits in kind, etc) the amount of that contribution shall be calculated to the nearest penny, and any amount of a halfpenny or less shall be disregarded.

Prescribed emoluments in respect of which Class 1A contributions not payable
     40.  - (1) Class 1A contributions shall not be payable in respect of the emoluments prescribed by paragraphs (2) to (7).

    (2) The emoluments prescribed by this paragraph are emoluments which are excluded from the calculation of a person's earnings in respect of any employed earner's employment by virtue of the following provisions of Schedule 3 - 

(a) in Part VI, paragraphs 4 to 7;

(b) in Part VIII, paragraphs 4, 5 and 13;

(c) in Part IX, paragraphs 2 to 7; and

(d) in Part X, paragraphs 5, 9 and 11 to 13.

    (3) The emoluments prescribed by this paragraph are emoluments which are payments which are not excluded from the calculation of a person's earnings in respect of any employed earner's employment by virtue of paragraph 1 of Part II of Schedule 3 (payments in kind), but which are so excluded by virtue of paragraph 3 of Part VIII of Schedule 3 (qualifying travelling expenses) or paragraph 9 of that Part (specific and distinct expenses).

    (4) The emoluments prescribed by this paragraph are emoluments which - 

(a) are excluded from the calculation of a person's earnings in respect of any employed earner's employment by virtue of paragraph 2(2)(b) of Part VIII of Schedule 3 (relocation expenses where the relevant change occurred before 6th April 1998); and

(b) are not paid in respect of eligible removal expenses within the meaning of Part III of Schedule 11A to the Taxes Act[45].

    (5) The emoluments prescribed by this paragraph are emoluments which consist in the provision, or are provided in connection with all or part of the costs and expenses, of child care (but not school fees) incurred by an employed earner in respect of a child not exceeding the age of 16 years for whom he has parental responsibility.

    (6) The emoluments prescribed by this paragraph are emoluments by way of any benefit pursuant to - 

(a) a retirement benefits scheme which falls within section 596(1) of the Taxes Act (retirement benefits schemes: exceptions from section 595)[46] or to which section 596(2) of that Act applies;

(b) a pilots' benefit fund under section 607 of the Taxes Act[47];

(c) a fund to which section 608 of the Taxes Act (superannuation funds approved before 6th April 1980) applies.

    (7) The emoluments prescribed by this paragraph are so much of any emoluments as are not charged to income tax under Schedule E by virtue of any of the following extra-statutory concessions published by the Board as at 1st September 2000 - 

(a) A2 (meal vouchers);

(b) A6 (miners: free coal and allowances in lieu);

(c) A11 (residence in the United Kingdom: year of commencement o