Clause 3 - Agreements and joint elections: Great Britain
National Insurance Contributions and Statutory Payments Bill
10:30 am
Ms Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)
I congratulate the hon. Member for Hertford and Stortford on spotting two typos. He was quite right when he referred to the ''or'' at the end of new paragraph (2B)(b) in clause 3(2)(b). The ''or'' is unnecessary. As for his reference to the regulatory impact assessment, the clause transfers the employer's secondary national insurance contributions to the employee. It is gratifying to see how carefully he scrutinises every piece of work.
It might help to answer first the questions from the hon. Members for Hertford and Stortford and for North Norfolk about the election. The Inland Revenue will want to ensure that, as regards what the employer has done, the employee understands their liabilities as contained in the joint election. In order for the joint election to transfer secondary contributions from the employer to the employee and for that to be approved by the Inland Revenue, it must contain statements that clearly inform the employee of the purpose and effect of the election and how it will be put into practice when a particular chargeable event occurs. The election must also include a declaration by both the employer and the employee that they will be bound by the terms of the election.
Schedule 5 of the Social Security (Contributions) Regulations 2001 provides that the approved election must contain the following statements. It must specify that it is for transferring the employer's national insurance liability on share options granted to the employee, and it must specify the details of the options to be covered by the election and that the election has to be limited to share options. A statement and explanation of the effect of the legislation at section 4(4)(a) of the Social Security Contributions and Benefits Act 1992 is required, which ensures that the employee is asked to pay only the secondary national insurance liability that arises on gains from share options granted to him or her. It must state the amount or proportion of the employer's contribution that the employee will bear, including an acknowledgement that the liability was originally that of the employer and that the employee will now pay it.