Draft Social Security (Class 2 National Insurance Contributions Increase of Threshold) Regulations 2022

(Limited Text - Ministerial Extracts only)

Tuesday 29th November 2022 General Committees

[The Financial Secretary to the Treasury (Victoria Atkins)]

I beg to move,

That the Committee has considered the draft Social Security (Class 2 National Insurance Contributions Increase of Threshold) Regulations 2022.

It is a pleasure to serve under your chairmanship, Mrs Cummins. You suit that seat very well, if I may say so.

The Government’s priority for taxation is to be fair by following two broad principles: first, we ask those with more to contribute more, and secondly, we avoid the tax rises that most damage growth. The measure we are discussing today delivers the final element of Government’s ultimate ambition to align the national insurance contributions thresholds with the personal allowance for income tax. In other words, nobody pays tax wbelow £12,570. This latest and last change benefits around 500,000 self-employed people.

The National Insurance Contributions (Increase of Thresholds) Act 2022 increases the point at which class 1 NICs and class 4 NICs are paid to align with the personal allowance for income tax. The measure will also increase the point at which the self- employed pay class 2 NICs, so that it aligns with the personal allowance. In practice, this measure means that no one will pay a penny of income tax or NICs on their first £12,570 of income.

The measure goes further, and through class 2 NICs—the mechanism by which the self-employed become entitled to certain contributory benefits such as the state pension and statutory maternity pay—we will maintain the point at which the self-employed gain access to those benefits through the small profits threshold. That means that individuals will benefit from the increased threshold for paying class 2 NICs without losing their entitlement to contributory benefits. That will apply retrospectively from the start of the 2022-23 tax year, and will be delivered by the annual self-assessment process for the vast majority of customers following the end of the tax year.

The measure is the fulfilment of the Government’s obligation to increase the point at which the self-employed pay class 2 NICs and, importantly, it allows people to keep more of what they earn. I therefore seek approval of the regulations.

--- Later in debate ---

[James Murray]

Absolutely, Mrs Cummins. I am simply asking the Minister to compare her comments on the regulations in front of us with what she said last night. She may choose to address that in her response.

[Victoria Atkins]

This is not in scope.

[The Chair]

Not in scope.

--- Later in debate ---

[Victoria Atkins]

I am extremely grateful to the shadow Minister for his comments. As he knows, none of his questions are within the scope of the regulations. I will be very happy—[Interruption.]

[The Chair]

May I gently remind everyone that some of the hon. Gentleman’s questions are in scope? If they were not, I would have said. But do feel free to write to the shadow Minister.

--- Later in debate ---

[Victoria Atkins]

Yes.

I am helpfully reminded that the Office for Budget Responsibility produced updated forecasts for the autumn statement, including on all previous measures. Any broader debates about the autumn statement should be dealt with tomorrow in the Finance Bill Committee.

[James Murray]

You have been very clear in your guidance, Mrs Cummins, about what is within and without scope. The points that I referenced about the tax information and impact note were referred to in the explanatory memorandum to the regulations. I therefore followed your judgment, Mrs Cummins, that they were within scope. If the Minister is not entirely clear of my argument, she can either consult Hansard or speak to me after the Committee rises.

[Victoria Atkins]

I have been assured that we produced updated forecasts, as I have already said, for the autumn statement. On the details about TIIMs, I will happily speak to him after the Committee, or write to him and put a copy of my response in the Library. We are in danger of encroaching on the Finance Bill, however, and—

[James Murray]

Will the Minister give way?

[Victoria Atkins]

I have already said to the shadow Minister that I will write to him on outstanding matters. I have taken that approach because we will be going through an awful lot of this tomorrow in the Committee stage of the Finance Bill.

Question put and agreed.