Clause 4 - Consequential changes to tax relief provisions.
Social Security Contributions
12:00 pm
Mr Stephen Timms (Financial Secretary, HM Treasury; East Ham, Labour)
This amendment, too, relates only to options that were granted in the gap period between 6 April 1999 and 19 May 2000 and to cases in which there has been an election to transfer the liability for the class 1 national insurance contributions to the employee. It is based on the assumption that the reference in subsection (3) to clause 2(4) is superfluous because no double deduction would in any case be possible when payment of the special contribution was not made within the 92-day notice period.
Income tax relief is given in section 187A of the Income and Corporation Taxes Act 1988 when an election has been entered into that transfers a liability for secondary national insurance to the employee. The clause here ensures that relief will be given if that liability is converted to that of a special contribution. If the special contribution is not paid within the 92-day notice period, so that the liability is subsequently extinguished, the wording in subsection (3) that is the subject of the amendment is still required in order to review any possibility of double income tax relief.
There would be very few circumstances in which this part of the legislation would take effect, but it is still required to remove any possibility of double income relief. I hope that, on that basis, the hon. Gentleman will withdraw the amendment.