Social Security Act 1973

JurisdictionUK Non-devolved
Citation1973 c. 38


Social Security Act 1973

1973 CHAPTER 38

An Act to establish a basic scheme of social security contributions and benefits replacing the National Insurance Acts, to assimilate to it the operation of the Industrial Injuries Acts and the old Cases Acts; to make further provision with respect to occupational pension schemes (including schemes financed from public funds), to establish an occupational Pensions Board with functions in respect of such schemes (including in particular functions with respect to the recognition of schemes, the preservation of benefits and the modification of schemes for the purpose of obtaining recognition and other purposes); to establish a contributory reserve pension scheme under a Reserve Pension Board providing pensions in respect of service in employment which is not recognised pensionable employment; and for purposes connected with those matters.

[18th July 1973]

Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

I The Basic Scheme

PART I

The Basic Scheme

Chapter I:Contributions

Preliminary

Preliminary

S-1 Outline of basic scheme contributory system.

1 Outline of basic scheme contributory system.

(1) The funds required—

(a ) for paying such benefits under Chapter II below as are payable out of the National Insurance Fund and not out of other public money;

(b ) for the making of payments under Chapter III below towards the cost of the national health service and into the Redundancy Fund; and

(c ) for paying benefit under the Industrial Injuries Acts and the Old Cases Acts,

shall be provided by means of contributions payable to the Secretary of State by earners, employers and others, together with the Treasury supplements specified in subsection (5) below.

(2) Contributions under this Part of this Act shall be of the following four classes—

Class 1, earnings-related, payable under section 2, being—

(a ) primary Class 1 contributions from employed earners, and

(b ) secondary Class 1 contributions from employers and other persons paying earnings;

Class 2, flat-rate, payable weekly under section 3 by self-employed earners;

Class 3, payable under section 4 by earners and others voluntarily with a view to providing entitlement to benefit, or making up entitlement; and

Class 4, payable under section 5 in respect of the profits or gains of a trade, profession or vocation, or in respect of equivalent earnings.

(3) The amounts and rates of contributions in this Chapter and the other figures therein which affect the liability of contributors shall be subject to regulations under Chapter III and, to the extent provided for by sections 7 and 8 of this Act, to alteration by orders made by the Secretary of State from year to year under those sections.

(4) Schedule 1 to this Act—

(a ) shall have effect with respect to the computation, collection and recovery of contributions of Classes 1, 2 and 3, and otherwise with respect to contributions of those classes; and

(b ) shall also, to the extent provided by regulations made under section 5(10) of this Act, have effect with respect to the computation, collection and recovery of Class 4 contributions, and otherwise with respect to such contributions, where under that subsection provision is made for contributions of that class to be recovered by the Secretary of State and not by the Inland Revenue under section 5(1) to (3).

(5) Subject to section 41(2) below (mariners, etc.), there shall by way of supplement to contributions be paid out of money provided by Parliament, in such manner and at such times as the Treasury may determine, amounts the total of which for any year is equal to 18 per cent. of so much of all contributions (of the four classes) paid in that year as remains after deducting the appropriate national health service allocation and the appropriate allocation to the Redundancy Fund.

(6) In respect of any period beginning on or after the appointed day no contributions shall be payable—

(a ) under section 1 of the National Health Service Contributions Act 1965 ; or

(b ) under section 2(1)(a ) of the Industrial Injuries Act; or

(c ) under section 27 of the Redundancy Payments Act 1965 ;

nor shall there be payable the Treasury supplement under section 2(1)(b ) of the Industrial Injuries Act.

(7) In this Act ‘employed earner’ means a person who is gainfully employed in Great Britain either under a contract of service, or in an office (including elective office) with emoluments chargeable to income tax under Schedule E; and ‘self-employed earner’ means a person who is gainfully employed in Great Britain otherwise than in employed earner's employment (whether or not he is also employed in such employment).

(8) Regulations may provide—

(a ) for employment of any prescribed description to be disregarded in relation to liability for contributions otherwise arising from employment of that description;

(b ) for a person in employment of any prescribed description to be treated, for the purposes of this Act, as falling within one or other of the categories of earner defined in subsection (7) above, notwithstanding that he would not fall within that category apart from the regulations.

(9) For the purposes of this Act, a person shall be treated as a self-employed earner as respects any week during any part of which he is such an earner (without prejudice to his being also treated as an employed earner as respects that week by reference to any other employment of his).

(10) No person shall—

(a ) be liable to pay Class 1 or Class 2 contributions unless he fulfils prescribed conditions as to residence or presence in Great Britain;

(b ) be entitled to pay Class 3 contributions unless he fulfils such conditions; or

(c ) be entitled to pay Class 1 or Class 2 contributions other than those which he is liable to pay, except so far as he is permitted by regulations to pay them.

The four classes of contributions

The four classes of contributions

S-2 Class 1 contributions.

2 Class 1 contributions.

(1) For the purposes of this Act, there shall for every year (which in this Part of this Act means an income tax year, except where it is otherwise stated, or the context is one relating to a person's age) be—

(a ) a lower earnings limit for Class 1 contributions, being the level of weekly earnings at which employed earners become liable for such contributions in respect of the earnings from their employments; and

(b ) an upper earnings limit for Class 1 contributions, being the maximum amount of weekly earnings in respect of which such contributions are payable;

and the lower and upper earnings limits shall be respectively 8 and 48.

(2) Where in any income tax week earnings are paid to or for the benefit of an earner in respect of any one employment of his, being employed earner's employment, and—

(a ) he is over school-leaving age; and

(b ) the amount paid is equal to or exceeds the current lower earnings limit (or the prescribed equivalent in the case of earners paid otherwise than weekly),

there shall be payable, in accordance with this section (and, except as provided by this Act, without regard to any other payment of earnings to or for the benefit of the earner in respect of any other employment), a primary and a secondary Class 1 contribution.

(3) The primary contribution shall be payable by the earner and the secondary contribution shall be payable by the secondary Class 1 contributor.

(4) Subject to subsection (5) below, the secondary contributor, in relation to any payment of earnings to or for the benefit of an employed earner, is—

(a ) in the case of an earner employed under a contract of service, his employer;

(b ) in the case of an earner employed in an office with emoluments, either—

(i) such person as may be prescribed in relation to that office, or

(ii) if no person is prescribed, the government department, public authority or body of persons responsible for paying the emoluments of the office.

(5) In relation to employed earners who—

(a ) are paid earnings in an income tax week by more than one person in respect of different employments; or

(b ) work under the general control or management of a person other than their immediate employer,

and in relation to any other case for which it appears to the Secretary of State that such provision is needed, regulations may provide that for the purposes of this section the prescribed person is to be treated as the secondary Class 1 contributor in respect of earnings paid to or for the benefit of an earner.

(6) The amount of a Class 1 contribution shall be a percentage of so much of the earnings paid in the week, in respect of the employment in question, as does not exceed the current upper earnings limit (or the prescribed equivalent in the case of earners paid otherwise than weekly); and (subject to regulations under Chapter III)—

(a ) the primary contribution shall be 5.25 per cent. or 0.6 per cent., according to whether the earner is liable to contribute at the standard rate or the reduced rate; and

(b ) the secondary contribution shall be 7.5 per cent.

(7) An employed earner liable for a primary Class 1 contribution shall be liable to contribute at the standard rate except where the earner—

(a ) is over pensionable age and has retired from regular employment; or

(b ) although over pensionable age, has not retired from regular employment, and at the time when he attained pensionable age did not satisfy the contribution conditions for a Category A retirement pension; or

(c ) is a married woman or widow who has...

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