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National Insurance Contributions

Volume 894: debated on Thursday 26 June 1975

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asked the Secretary of State for Social Services what percentage of the national insurance contribution of an employed adult male is attributable, upon an actual basis, to each of the various possible services thereby wholly or partially financed.

The primary class I contribution of 5·5 per cent. and the secondary class 1 contribution of 8·5 per cent., of earnings between £11 and £69 a week, are allocated as follows:

Primary contribution (percentage)Secondary contribution (percentage)
National Insurance Fund5·17·7
NHS0·40·6
Redundancy Fund0·2

asked the Secretary of State for Social Services what percentage of the national insurance contribution of a self-employed person—adult male—is attributable, upon an actual basis, to each of the various possible services thereby wholly or partially financed.

The class 2 contribution of £2·41 a week and the class 4 contribution of 8 per cent. of profits or gains between £1,600 and £3,600 a year are allocated as follows:

Class 2 contribution (percentage)Class 4 contribution (percentage)
National Insurance Fund927·4
NHS80·6

asked the Secretary of State for Social Services (1) whether she will make immediate arrangements for individuals deriving their income from multiple directorships or other sources of income to limit their total contributions to national insurance to a maximum of £400 from all sources in any one year, or to a maximum of £200 in excess of the maximum national insurance contribution due from any individual;(2) what estimates she has made of the number of individuals already paying the maximum national insurance contribution who will now be paying two or more contributions and claiming refund;(3) what she estimates to be the extent of the repayable contributions resulting from the over-payment of national insurance by those paying more than one contribution although already paying the maximum from one employment or self-employment;(4) what she estimates to be the administrative costs of collecting and refunding national insurance contributions to individuals who are now required to pay national insurance contributions on each category of earned or self-employed income;(5) whether she will, at the end of the present financial year for national insurance purposes, extend to individuals who have contributed sums in excess of the maximum an option to leave half the excess sum so contributed as a loan and thereafter to have only one maximum payment deducted from one source of income;(6) whether she will instruct her Department to make rapid arrangements for individuals who are already paying the national insurance maximum to be given a document by their local insurance office entitling them to exemption from any further and unnecessary payments on national insurance account;(7) what she estimates to be the number of company directors with more than one directorship who will be paying more than five times the maximum national insurance contribution.

The liability of people with two or more employments to pay contributions in respect of their earnings in each employment is inherent in the contribution structure established under the Social Security Act 1973. The new system has been in operation for less than three months and it is not possible at this early stage to provide the detailed information the hon. Member is seeking.Arrangements already exist for deferring contributions by the self-employed where they also have substantial earnings as employed earners and, as the hon. Member knows, contributions paid by employed and self-employed earners in excess of prescribed annual maxima are refundable. Present procedures for collecting and recording employed earners' contributions do not however permit the payment of excess amounts to be identified before the end of a tax year. My Department is currently reviewing these procedures to see whether some arrangements can be made, within the constraints imposed by the structure of the scheme, which would minimise the extent to which employed earners with two or more employments are required to pay more than the annual maxima. I will write to the hon. Member when these investigations have been completed.