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National Insurance Contributions

Volume 13: debated on Friday 27 November 1981

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asked the Secretary of State for Social Services what national insurance contributions under classes 1, 2 and 4 will be borne by a self-employed person who earns £50,000 per annum in professional practice, included in the profits of which and assessed by the Inland Revenue under schedule D case II, are fees as a non-executive director of three other companies of £8,000, £7,000 and £6,000, respectively.

As a director, a person in this position would pay class 1 contributions of £806 for 1981–82, assuming that he had deferred his liability to pay contributions in one of his employments. He would have no class 2 or class 4 liability.

asked the Secretary of State for Social Services which national insurance contributions under classes 1, 2 and 4 will be borne by each of the individuals and employers in each of the following examples: (a) an employee employed full-time by one company at a salary of £50,000 per annum, (b) an employee employed mainly by a company at a salary of £30,000 per annum and as a non-executive director by two other companies not associated in any way with the first company at fees in each case of £10,000 per annum and (c) an employee employed full-time by a company at a salary of £50,000 per annum and as a non-executive director by another company at fees of £10,000 per annum for which he accounts in full to the first company.

(a)

(b)

(c)

Salary

£50,000

(i) £30,000

(ii) £10,000

(iii) £10,000

(i) £50,000

(ii) £10,000

Class 1 contributions (not-contracted out)Employee£806£806

*

*

£806

*

Employer£1,424·80£1,424·80£1,370£1,370£1,424·80£1,370
No Class 2 or Class 4 contributions will be payable.

* Assumes that the contributor will have deferred his liability to pay contributions, in the knowledge that he will be paying the maximum contributions required in his first employment.

asked the Secretary of State for Social Services whether class 1 national insurance contributions are calculated as far as is practicable on the insurance principle to meet the cost of the benefits to which the individual is, or may become, entitled; or whether their level is set by reference to a desired level of revenue, as in the case of taxation.

The national insurance elements in the contributions are set at rates calculated after taking Treasury supplement, interest, administration, and so on, into account, to provide a rough balance between the income and outgo of the national insurance fund.