National Insurance Contributions Bill – in a Public Bill Committee at 10:15 am on 22nd June 2021.
It may help the Committee if I start by explaining some of the background to clause 10. We are making good progress, and we move now to the treatment of self-isolation support scheme payments in respect of contributions paid by the self-employed.
In response to the coronavirus pandemic, the Government announced last September the launch of a £500 support payment in England for low-income individuals who had been told to self-isolate but who could not work from home and would lose income as a result. The Scottish and Welsh Governments announced similar schemes shortly after that. To ensure that those payments, which are provided by local authorities, would not be subject to employee and employer class 1 and class 1A NICs, the Government introduced secondary legislation to exempt payments under the support schemes from employee and employer class 1 and class 1A NICs.
Clause 10 is intended to extend that exemption to the self-employed and retrospectively exempts Test and Trace support payments from class 2 and class 4 NICs for the 2020-21 tax year. The clause also enables the Government to ensure, through regulations, that future Test and Trace support payments will not be included in profits liable to class 2 and class 4 NICs.
Clause 10 provides a national insurance contributions exemption for payments made under a self-isolation support scheme. That ensures that they are not taken into account for the purposes of computing profits liable to class 4 NICs or for the purposes of class 2 NICs.
As I set out on Second Reading, we welcome this exemption from national insurance contributions for payments made under a self-isolation support scheme. It is crucial that people who need support to self-isolate receive it, so we welcome any steps that make the system for self-isolation payments more effective and subject to less administrative burden.
The Minister may recall that on Second Reading I asked why the exemption for class 2 and class 4 contributions was not implemented earlier, in line with the exemption for class 1 contributions. In response, his colleague the Exchequer Secretary explained that
“class 1 NICs exemptions were made in regulations. However, the self-employed exemption requires primary legislation, and therefore is included in this Bill, as this is the earliest opportunity to legislate.”—[Official Report,
I accept that the formal processes for introducing the exemptions for the different classes of NICs may differ, but my point on Second Reading was that announcing the class 2 and class 4 exemptions earlier could have given much-needed certainty to self-employed people at an earlier point in the outbreak. I am sure that the Minister would agree that self-employed people would have benefited from such certainty. The Exchequer Secretary seemed to claim in her comments that the Government’s intention was always to provide that relief for class 2 and 4 NICs, and the delay appears to have been for solely practical reasons.
I would therefore be grateful if the Minister confirmed exactly when the Treasury announced, by way of ministerial statement or other appropriate means, that the exemption for national insurance contributions would be extended to class 2 and class 4 contributions for payments made under a self-isolation support scheme.
The hon. Gentleman asks why it was not exempted earlier; the Exchequer Secretary was absolutely right that it is a quirk of our tax system that regulations should be used to exempt national insurance contributions on the employment side, but not these ones. I do not have the date that he describes at hand, and I am happy to write to him on that. It has always been the Government’s intention that the self-employed should benefit from that, as one would expect, given the nature of national insurance contributions and the overall treatment of employment and self-employment.