National Insurance Contributions

Treasury written question – answered on 14th May 2008.

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Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby

To ask the Chancellor of the Exchequer if he will estimate the revenue that would be raised in 2008-09 if the upper limit on national insurance contributions were abolished.

Photo of Jane Kennedy Jane Kennedy Financial Secretary, HM Treasury

The yield from removing the upper earnings limit for employees Class 1 National Insurance contributions is around £8.5 billion for 2008-09. This estimate includes the yield from the consequent increase in the upper profit limit for Class 4 contributions paid by the self employed, and the cost of the increase in employee and employer rebates for contracting out of state second pension.

This excludes any estimate of behavioural effects which could be significant given the scale of the change.

The estimate is consistent with Budget 2008 assumptions and assumes that the NHS allocation contribution rates are unchanged.

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