Commentary on provisions of Act Schedule: Transitional and consequential provisions
Paragraph 1 amends the rate of Class 1A NICs for the 2022-23 tax year that do not relate to sporting testimonial cash payments or termination awards, as set out in section 10 of the Social Security Contributions and Benefits Act 1992 and regulation 40C and 40D of the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004), to 14.53%. Class 1A NICs that do not relate to termination awards and sporting testimonials cash payments are assessed on an annual basis, therefore a blended rate has been applied to ensure consistency with Class 1 and 4 NICs.
	Paragraph 2 makes provision for the rate of Class 1A NICs for the 2022-23 tax year that relate to sporting testimonial cash payments and termination awards, as set out in section 10 of the Social Security Contributions and Benefits Act 1992 (and Northern Ireland equivalents), so the 2021-22 tax year rate applies from 6 November 2022. Class 1A NICs that relate to termination awards and sporting testimonial cash payments are assessed based on the rate applicable at the time of payment, therefore a blended rate is not appropriate.
	Paragraph 3 amends the rate of Class 1B NICs for the 2022-23 tax year, as set out in section 10A of the Social Security Contributions and Benefits Act 1992 (and Northern Ireland equivalent), to 14.53%. Class 1B is assessed on an annual basis, therefore a blended rate has been applied to ensure consistency with changes to other NICs rates.
	Paragraph 4 reduces the married women and widows reduced rate of primary Class 1 NICs with effect from 6 November 2022. This removes the temporary increase made by the Social Security (Contributions) (Amendment No. 2) Regulations 2022 (S.I. 2022/416) for the remainder of the tax year.
	Paragraph 5 reduces the rate of Class 1 NICs for directors to whom regulation 8(2) to (5) of the Social Security (Contributions) Regulations 2001 applies (which also applies for Northern Ireland) to a main rate of 12.73% and additional rate of 2.73% for the 2022-23 tax year. Class 1 NICs paid by directors are assessed on an annual basis. A blended rate has been applied to ensure consistency and fairness with in-year changes to other rates of NICs. Paragraph 5 also provides a blended rate of 6.58% for directors who have elected to pay the married women and widows reduced rate.
	Paragraph 6 amends the calculation of the annual maximum for the 2022-23 tax year, as set out in regulations 21 and 100 of the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004). This calculation is assessed on an annual basis, therefore blended rates have been used to ensure consistency with in-year changes to other rates of NICs. Paragraph 6 also revokes the Social Security (Contributions) (Amendment) Regulations 2022 (S.I. 2022/300) which are superseded by this change.
	NICs collected are paid to the National Insurance Fund and the National Health Service in a proportion set out in Section 162 of the Social Security Administration Act 1992 (and Northern Ireland equivalents). Paragraph 7 ensures that NICs collected on or after 6 November (or the amount attributed as a result of the blended rate where NICs is assessed on an annual basis) is allocated in the same proportion as the 2021-22 tax year. The Health and Social Care Levy Act 2021 had previously increased the proportion to be sent to the NHS. This Act repeals the changes made to the allocation by the Health and Social Care Levy Act 2021, and Paragraph 7 ensures that the NICs collected due to the transitional rate is allocated correctly. This paragraph and the Act adjust the balance of funding between NICs receipts and general taxation following the repeal of the Health and Social Care Levy Act 2021 and the in-year reduction in NICs rates. Despite repealing the Levy, the government will maintain overall funding for health and social care services at the same level as if the Levy was in place, and will be doing this without the tax increase.
	Paragraph 8 ensures that that powers to increase NICs rates by secondary legislation in sections 143 and 145 of the Social Security Administration Act 1992, which are limited by reference to the rates in force at the end of the previous tax year, are not affected by any changes to NICs rates made by this Bill. Paragraph 8 ensures that the allocation of NICs in the 2023-24 tax year and beyond is consistent with the allocation in the 2021-22 tax year.
	Paragraph 9 provides HM Treasury with a power to make consequential provisions including amending primary legislation and retrospective provision back to 6 April 2022. Statutory Instruments made using this power are subject to the negative procedure in the House of Commons.