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Social Security Contributions and Benefits Act 1992

Type Public General Act

Publication 1992-02-13

Last updated 2026-05-06

State In force

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which the regulations require to be kept or produced or to which those regulations otherwise apply, of such particulars relating to relevant payments or benefits within the meaning of section 4A above or (as the case may be) to statutory sick pay, statutory maternity pay or deductions or payments made by virtue of section 167(1) above as may be prescribed by those regulations.

(7) Section 98 of the Taxes Management Act 1970 shall apply in relation to regulations made under sub-paragraph (1) or (5) as it applies in relation to PAYE regulations.

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Special penalties in the case of certain returns

7

(1) This paragraph applies where regulations under sub-paragraph (1) of paragraph 6 above make provision requiring any return which is to be made in accordance with a specified provision of regulations under that sub-paragraph (the “contributions return”) to be made—

(a) at the same time as any specified return required to be made in accordance with a provision of PAYE regulations or regulations made under section 70(1)(a) or 71 (sub-contractors) of the Finance Act 2004 to which section 98A of the Taxes Management Act 1970 applies (the “tax return”); or

(b) if the circumstances are such that the return mentioned in paragraph (a) above does not fall to be made, at a time defined by reference to the time for making that return, had it fallen to be made;

and, in a case falling within paragraph (b) above, any reference in the following provisions of this paragraph to the tax return shall be construed as a reference to the return there mentioned.

(2) Where this paragraph applies, regulations under paragraph 6(1) above may provide that section 98A of the Taxes Management Act 1970 (penalties for late, fraudulent or negligent returns) shall apply in relation to any specified provision of regulations in accordance with which the contributions return is required to be made; and where they so provide then, subject to the following provisions of this paragraph—

(a) that section shall apply in relation to the contributions return as it applies in relation to the tax return; and

(b) sections 100 to 100D and 102 to 105 of that Act shall apply in relation to a penalty under section 98A of that Act to which a person is liable by virtue of this sub-paragraph as they apply in relation to any other penalty under that section.

(3) Where a person has been required to pay a penalty under paragraph (a) of subsection (2) of section 98A of that Act (first twelve months’ default) in consequence of a failure in respect of a tax return, he shall not also be required to pay a penalty under that paragraph in respect of any failure in respect of the associated contributions return.

(4) In any case where—

(a) a person is liable to a penalty under subsection (2)(b) or (4) of that section (tax-related penalties) in respect of both a tax return and its associated contributions return, and

(b) an officer of the Inland Revenue authorised for the purposes of section 100 of that Act has determined that a penalty is to be imposed under that provision in respect of both returns,

the penalty so imposed shall be a single penalty of an amount not exceeding the limit determined under sub-paragraph (5) below.

(5) The limit mentioned in sub-paragraph (4) above is an amount equal to the sum of—

(a) the maximum penalty that would have been applicable under subsection (2)(b) or (4) of section 98A of that Act (as the case may be) for a penalty in relation to the tax return only; and

(b) the maximum penalty that would have been so applicable in relation to the associated contributions return only.

(6) So much of any single penalty imposed by virtue of sub-paragraph (4) above as is recovered by the Inland Revenue shall, after the deduction of any administrative costs of the Inland Revenue attributable to its recovery, for the purposes of making any payment into the National Insurance Fund be apportioned between income tax and contributions in the ratio T:C, where—

T is the maximum penalty that could have been imposed under the provision in question in relation to the tax return only; and

C is the maximum penalty that could have been so imposed in relation to the associated contributions return only.

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) Sub-paragraph (6) above shall have effect notwithstanding any provision which treats a penalty under section 98A of that Act as if it were tax charged in an assessment and due and payable.

(9) In the application of section 98A of that Act by virtue of this paragraph, any reference to a year of assessment shall be construed, in relation to a contributions return, as a reference to the tax year corresponding to that year of assessment.

(10) In the application of section 100D of that Act (court proceedings for penalties in cases of fraud) by virtue of this paragraph—

(a) subsection (2) shall have effect with the omission of the words “ or Northern Ireland ” and paragraph (c); and

(b) subsection (3) shall have effect with the omission of the words from “ and any such proceedings instituted in Northern Ireland ” onwards.

(11) In the application of section 103 of that Act (time limit for recovery) by virtue of this paragraph—

(a) any reference in subsection (1) to tax shall be taken to include a reference to Class 1, Class 1A and Class 1B contributions;

(b) any penalty by virtue of sub-paragraph (4) above shall be regarded as a penalty in respect of the tax return in question; and

(c) where, by virtue of subsection (2) (death), subsection (1)(b) does not apply in relation to a penalty under section 98A(2)(b) or (4) of that Act in respect of a tax return, it shall also not apply in relation to a penalty so imposed in respect of the associated contributions return.

(12) A penalty under section 98A of that Act as it applies by virtue of this paragraph shall not be imposed where—

(a) a decision relating to contributions falls to be made under or by virtue of section 8, 10 or 11 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999, and has not yet been made; and

(b) the decision will affect a person’s liability for the penalty, or the amount of it.

(13) For the purposes of this paragraph—

(a) “contributions return” and “tax return” shall be construed in accordance with sub-paragraph (1) above; and

(b) a contributions return and a tax return are “associated” if the contributions return is required to be made—

(i) at the same time as the tax return, or

(ii) where sub-paragraph (1)(b) above applies, at a time defined by reference to the time for making the tax return.

7A

(1) This paragraph applies where paragraph 7 above applies; and in this paragraph “contributions return” has the same meaning as in that paragraph.

(2) Without prejudice to paragraph 7(2) above or to the other powers of the Inland Revenue to penalise omissions or errors in returns, regulations made by the Treasury may provide for the Inland Revenue to impose penalties in respect of a person who, in making a contributions return, fraudulently or negligently—

(a) fails to provide any information or computation that he is required to provide; or

(b) provides any such information or computation that is incorrect.

(3) Regulations under sub-paragraph (2) above shall—

(a) prescribe the rates of penalty, or provide for how they are to be ascertained;

(b) provide for the penalty to be imposed by the Inland Revenue within six years after the date on which the penalty is incurred;

(d) prescribe the means by which the penalty is to be enforced; and

(e) provide for enabling the Inland Revenue, in their discretion, to mitigate or to remit the penalty, or to stay or to compound any proceedings for it.

Collection of contributions otherwise than through PAYE system

7B

(1) The Treasury may by regulations provide that, in such cases or circumstances as may be prescribed, Class 1, Class 1A, Class 1B or Class 2 contributions shall be paid to the Inland Revenue in a manner different from that in which income tax in relation to which PAYE regulations apply is payable.

(2) Regulations under this paragraph may, in particular—

(a) provide for returns to be made to the Inland Revenue by such date as may be prescribed;

(b) prescribe the form in which returns are to be made, or provide for returns to be made in such form as the Inland Revenue may approve;

(c) prescribe the manner in which contributions are to be paid, or provide for contributions to be paid in such manner as the Inland Revenue may approve;

(d) prescribe the due date for the payment of contributions;

(e) require interest to be paid on contributions that are not paid by the due date, and provide for determining the date from which such interest is to be calculated;

(f) provide for interest to be paid on contributions that fall to be repaid;

(g) provide for determining the date from which interest to be charged or paid pursuant to regulations under paragraph (e) or (f) above is to be calculated;

(h) provide for penalties to be imposed in respect of a person who—

(i) fails to submit, within the time allowed, a return required to be made in accordance with regulations under paragraph (a) above;

(ii) in making such a return, fraudulently or negligently fails to provide any information or computation that he is required to provide;

(iii) in making such a return, fraudulently or negligently provides any incorrect information or computation; or

(iv) fails to pay Class 2 contributions by the due date;

(i) provide for a penalty imposed pursuant to regulations under paragraph (h) above to carry interest from the date on which it becomes payable until payment.

(3) Where—

(a) a decision relating to contributions falls to be made under section 8, 9, 10, 12, 14 or 15 of the Social Security Act 1998; and

(b) the decision will affect a person’s liability for, or the amount of, any interest due in respect of those contributions,

regulations under sub-paragraph (2)(e) above shall not require any such interest to be paid until the decision has been made.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) Regulations under sub-paragraph (2)(h) above shall—

(a) prescribe the rates of penalty, or provide for how they are to be ascertained;

(b) ... provide for the penalty to be imposed by the Inland Revenue—

(i) within six years after the date on which the penalty is incurred; or

(ii) where the amount of the penalty is to be ascertained by reference to the amount of any contributions payable, at any later time within three years after the final determination of the amount of those contributions;

(d) prescribe the means by which the penalty is to be enforced; and

(e) provide for enabling the Inland Revenue, in their discretion, to mitigate or to remit the penalty, or to stay or to compound any proceedings for it.

(5A) Regulations under this paragraph may, in relation to any penalty imposed by such regulations, make provision applying (with or without modifications) any enactment applying for the purposes of income tax that is contained in Part X of the Taxes Management Act 1970 (penalties).

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) Interest or penalties may be charged by virtue of regulations under this paragraph in respect of a period before the coming into force of section 57 of the Social Security Act 1998 but only to the extent that interest or penalties would have been chargeable if the contributions in question had been recoverable, in respect of that period, by virtue of regulations under paragraph 6 above.

(9) Any reference to contributions in sub-paragraph (1) above shall be construed as including a reference to any interest or penalty payable, in respect of contributions, by virtue of regulations under paragraph (e) or (h) of sub-paragraph (2) above.

(10) The rate of interest applicable for any purpose of this paragraph shall be the rate from time to time prescribed under section 178 of the Finance Act 1989 for the corresponding purpose of paragraph 6 above.

7BZA

(1) The Inland Revenue may by regulations provide for Class 1, Class 1A, Class 1B or Class 2 contributions to which regulations under paragraph 7B apply to be recovered in a similar manner to income tax.

(2) Regulations under sub-paragraph (1) may apply or extend with or without modification in relation to such contributions any of the provisions of the Income Tax Acts or of PAYE regulations.

(3) Any reference to contributions in this paragraph shall be construed as including a reference to any interest or penalty payable, in respect of contributions, by virtue of regulations under paragraph (e) or (h) of paragraph 7B(2).

7BA

The Inland Revenue may by regulations provide for amounts in respect of contributions or interest that fall to be paid or repaid in accordance with any regulations under this Schedule to be set off, or to be capable of being set off, in prescribed circumstances and to the prescribed extent, against any such liabilities under regulations under this Schedule of the person entitled to the payment or repayment as may be prescribed.

7BB

(1) Regulations may provide, in connection with maternity allowance under section 35 or 35B, for a person who is, or will be, ... entitled to pay a Class 2 contribution in respect of a week in a tax year to be able to pay a Class 2 contribution in respect of that week at any time in the period—

(a) beginning with that week, and

(b) ending with a prescribed date.

(2) The regulations may provide that where a person pays a Class 2 contribution in respect of a week in a tax year under the regulations—

(a) the contribution is to be treated, before the end of the tax year, as a Class 2 contribution under section 11(6);

(b) the contribution is to be treated, after the end of the tax year—

(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(ii) ...as a Class 2 contribution under section 11(6).

(3) Regulations under this paragraph are to be made by the Treasury acting with the concurrence of the Secretary of State.

General regulation - making powers

8

(1) The appropriate authority may by regulations provide—

(a) for requiring persons to maintain, in such form and manner as may be prescribed, records—

(i) of the earnings paid by them to and in respect of earners, and

(ii) of the contributions paid or payable in respect of earnings so paid,

for the purpose of enabling the incidence of liability for contributions of any class to be determined, and to retain the records for so long as may be prescribed;

(aa) for requiring persons to maintain, in such form and manner as may be prescribed, records of such matters as may be prescribed for purposes connected with the employment allowance provisions (within the meaning of the National Insurance Contributions Act 2014), and to retain the records for so long as may be prescribed;

(b) for requiring persons to maintain, in such form and manner as may be prescribed, records of such matters as may be prescribed for the purpose of enabling the incidence of liability for Class 1A or Class 1B contributions to be determined, and to retain the records for so long as may be prescribed;

(c) for treating primary Class 1 contributions, when payable on the primary contributor’s behalf by the secondary contributor, but not paid, as actually paid where the failure to pay is shown not to have been with the consent or connivance of, or attributable to any negligence on the part of, the primary contributor and, in the case of contributions so treated, for treating them also as paid at a prescribed time or in respect of a prescribed period;

(ca) for requiring a secondary contributor to notify a person to whom any of his liabilities are transferred by an election under paragraph 3B above of—

(i) any transferred liability that arises;

(ii) the amount of any transferred liability that arises; and

(iii) the contents of any notice of withdrawal by the Inland Revenue of any approval that relates to that election;

(d) for treating, for the purpose of any entitlement to benefit, contributions paid at or after any prescribed time as paid at some other time (whether earlier or later) or, in the case of contributions paid after the due date for payment, or at such later date as may be prescribed, as not having been paid;

(e) for enabling contributions to be treated as paid in respect of a tax year earlier or later than that in respect of which they were actually paid;

(f) for treating (for the purposes of Class 2 contributions) a week which falls partly in one, and partly in another, tax year as falling wholly within one or the other of those tax years;

(g) for treating contributions of the wrong class, or at the wrong rate, or of the wrong amount, as paid on account of contributions properly payable (notwithstanding section 14 above, in the case of Class 3 contributions) or as paid (wholly or in part) in discharge of a liability for a contributions equivalent premium;

(h) for the repayment, in prescribed cases, of the whole or a prescribed part of any contributions paid by reference to earnings which have become repayable;

(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(ia) for the repayment, in prescribed cases, of the whole or a prescribed part of a Class 1A or of a Class 1B contribution;

(j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(k) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(l) without prejudice to paragraph (g) above, for enabling—

(i) the whole or part of any payment of secondary Class 1 contributions to be treated as a payment of Class 1A contributions or a Class 1B contribution;

(ii) the whole or part of any payment of Class 1A contributions to be treated as a payment of secondary Class 1 contributions , a Class 1B contribution or Class 2 contributions;

(iia) the whole or part of any payment of a Class 1B contribution to be treated as a payment of secondary Class 1 contributions, Class 1A contributions or Class 2 contributions;

(iii) the whole or part of any payment of Class 2 contributions to be treated as a payment of secondary Class 1 contributions , Class 1A contributions or a Class 1B contribution;

(m) for the return of the whole or any prescribed part of any contributions paid either in error or in such circumstances that, under any provision of Part I of this Act or of regulations, they fall to be repaid;

(n) for treating a person as being an employed earner, notwithstanding that his employment is outside Great Britain;

(o) for treating a person’s employment as continuing during periods of holiday, unemployment or incapacity for work and in such other circumstances as may be prescribed;

(p) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(q) for any other matters incidental to the payment, collection or return of contributions.

(1A) In sub-paragraph (1), “the appropriate authority” means the Treasury, except that, in relation to—

(a) provision made by virtue of paragraph (d) of that sub-paragraph, and

(b) provision made by virtue of paragraph (q) of that sub-paragraph in relation to the matters referred to in paragraph (d),

it means the Secretary of State acting with the concurrence of the Inland Revenue.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

The Treasury may by regulations provide that—

(a) for the purpose of determining whether a contribution is payable in respect of any person, or

(b) for determining the amount or rate of any contribution,

he is to be treated as having attained at the beginning of a week, or as not having attained until the end of a week, any age which he attains during the course of that week.

Deduction of contributions from pension, etc.

10

(1) Where a person is in receipt of a pension or allowance payable by the Secretary of State by virtue of any prescribed enactment or instrument, the Secretary of State may with the consent of that person pay any contributions (other than Class 1 or Class 4 contributions) payable by him and deduct the amount so paid from the pension or allowance.

(2) Sub-paragraph (1) above shall have effect notwithstanding anything in any Act, Royal Warrant, Order in Council, order or scheme.

Sickness payments counting as remuneration

11

(1) The Treasury may by regulations make provision as to the manner in which, and the person through whom, any sickness payment which, by virtue of section 4(1) above, is to be treated as remuneration derived from employed earner’s employment is to be made.

(2) In any case where regulations made under sub-paragraph (1) above have the effect of requiring a registered friendly society (within the meaning of the Friendly Societies Act 1974) to make amendments to its rules, the amendments may, notwithstanding any provision of those rules, be made in accordance with the procedure prescribed by regulations made by the Chief Registrar of Friendly Societies for the purposes of this paragraph.

SCHEDULE 2

Interpretation

1

In this Schedule—

(a) “the Act of 1988” means the Income and Corporation Taxes Act1988;

(ab) “ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005;

(ac) “ITA 2007” means the Income Tax Act 2007;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Method of computing profits or gains

2

Subject to the following paragraphs, Class 4 contributions shall be payable in respect of the full amount of all profits—

(a) which are the profits of any relevant trade, profession or vocation which is not carried on wholly outside the United Kingdom, and

(b) which are chargeable to income tax under Chapter 2 of Part 2 of ITTOIA 2005.

Reliefs

3

(1) For the purposes of computing the amount of profits ... in respect of which Class 4 contributions are payable, relief shall be available under, and in the manner provided by, the following provisions of ITA 2007—

(a) sections 64 and 72 (set-off of trade losses against general income), but only where loss arises from activities the profits ... of which would be brought into computation for the purposes of Class 4 contributions;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d) section 89 (carry-back of terminal losses).

(2) The following relief provisions ... shall not apply, that is to say—

(a) Chapter I of Part VII of the Act of 1988 and Chapters 2 and 3 of Part 3 and sections 457, 458 and 459 of ITA 2007 (personal reliefs);

(b) section 383 of ITA 2007 (relief for payment of interest);

(d) sections 88 and 94 of ITA 2007 (treatment of interest as a loss for purposes of carry-forward or carry-back);

(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...

(f) sections 619 and 620 (premiums or other consideration under annuity contracts and trust schemes); and

(g) section 639 (personal pension contributions).

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Where in the year 1990-1991 or any subsequent year of assessment for which a person claims and is allowed relief by virtue of sub-paragraph (1) above there falls to be made in computing his net income for income tax purposes a deduction in respect of any loss in any relevant trade, profession or vocation—

(a) the amount of the deduction shall, as far as may be, be treated for the purpose of the charge to Class 4 contributions as reducing the person’s profits ... for that year of any relevant trade, profession or vocation, and

(b) any excess shall be treated for that purpose as reducing such profits ... for subsequent years (being deducted as far as may be from those of the immediately following year, whether or not the person claims or is entitled to claim relief under this paragraph for that year, and, so far as it cannot be so deducted, then from those of the next year, and so on).

(5) Relief shall be allowed, in respect of—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) payments under section 383 of ITA 2007 (relief for payment of interest), being payments for which relief from income tax is or can be given,

(i) section 900(2) of ITA 2007 (commercial payments made by individuals),

(ii) section 903(5) of that Act (patent royalties), or

(iii) section 906(5) of that Act (certain royalties etc where usual place of abode of owner is abroad),

(d) so much of any payment from which a sum representing income tax must be deducted under section 910(2) of ITA 2007 (proceeds of a sale of patent rights: payments to non-UK residents) as is equal to the amount referred to in that provision as “the chargeable amount”, or

(e) a payment from which a sum representing income tax must be deducted as a result of a direction under section 944(2) of ITA 2007 (tax avoidance: certain payments to non-UK residents)

so far as the payment is incurred wholly or exclusively for the purposes of any relevant trade, profession or vocation, by way of deduction from or set-off against profits ... chargeable to Class 4 contributions for the year in which the payments are made; and, in the case of any insufficiency of the profits ... of that year, the payments shall be carried forward and deducted from or set off against the profits ... of any subsequent year (being deducted or set off as far as may be from or against the profits ... of the immediately following year, whether or not relief can be claimed under this paragraph for that year, and so far as it cannot be so deducted, from or against those of the next year, and so on).

Partnerships

4

(1) Where a trade or profession is carried on by two or more persons jointly, the liability of any one of them in respect of Class 4 contributions shall arise in respect of his share of the profits ... of that trade or profession (so far as immediately derived by him from carrying it on); and for this purpose his share shall be aggregated with his share of the profits ... of any other trade, profession or vocation (so far as immediately derived by him from carrying it on or exercising it).

(2) Where sub-paragraph (1) above applies, the Class 4 contributions for which a person is liable in respect of the profits ... of the trade or profession carried on jointly (aggregated, where appropriate, as mentioned in that sub-paragraph) shall be charged on him separately.

Trustees, etc.

5

In any circumstances in which apart from this paragraph a person would—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) by virtue of section 8 of ITTOIA 2005 be assessed and charged to Class 4 contributions in respect of profits ... received or receivable by him in the capacity of trustee,

such contributions shall not be payable either by him or by any other person.

Other provisions

6

(1) Section 101 of the Finance Act 2009 (late payment interest on sums due to HMRC) shall apply in relation to any amount due in respect of Class 4 contributions as it applies in relation to income tax; and section 102 of the Finance Act 2009 (repayment interest on sums to be paid by HMRC) shall, with the necessary modifications, apply in relation to Class 4 contributions as it applies in relation to income tax.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

Where an assessment has become final and conclusive for the purposes of income tax for any year, that assessment shall also be final and conclusive for the purposes of computing liability for Class 4 contributions; and no allowance or adjustment of liability, on the ground of diminution of income or loss, shall be taken into account in computing profits ... chargeable to Class 4 contributions unless that allowance or adjustment has previously been made on an application under the special provisions of the Income Tax Acts relating to it, or falls to be allowed under paragraph 3(5) of this Schedule.

8

The provisions of Part V of the Taxes Management Act 1970 (appeals, etc.) shall apply with the necessary modifications in relation to Class 4 contributions as they apply in relation to income tax; but nothing in this Schedule affects the extent to which the Income Tax Acts apply with respect to any decision falling to be made—

(a) under subsection (1) of section 17 above or subsection (1) of section 17 of the Northern Ireland Contributions and Benefits Act as to whether by regulations under that subsection a person is excepted from liability for Class 4 contributions, or his liability is deferred; or

(b) under regulations made by virtue of section 17(3) or (4) or 18 above or section 17(3) or (4) or 18 of the Northern Ireland Contributions and Benefits Act.

...

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 3

Part I — The conditions

Unemployment benefit

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Short-term incapacity benefit

2

(1) The contribution conditions for short-term incapacity benefit are the following.

(2) The first condition is that—

(a) the claimant must have actually paid contributions of a relevant class in respect of one of the last three complete years before the beginning of the relevant benefit year, and those contributions must have been paid before the relevant time; and

(b) the earnings factor derived as mentioned in sub-paragraph (4) below must be not less than that year’s lower earnings limit multiplied by 25.

(3) The second condition is that—

(a) the claimant must in respect of the last two complete years before the beginning of the relevant benefit year have either paid or been credited with contributions of a relevant class or been credited (in the case of 1987-88 or any subsequent year) with earnings; and

(b) the earnings factor derived as mentioned in sub-paragraph (5) below must be not less in each of those years than the year’s lower earnings limit multiplied by 50.

(4) The earnings factor referred to in paragraph (b) of sub-paragraph (2) above is that which is derived—

(a) if the year in question is 1987-88 or any subsequent year—

(i) from so much of the claimant’s earnings as did not exceed the upper earnings limit and upon which primary Class 1 contributions have been paid or treated as paid; or

(ii) from Class 2 contributions; and

(b) if the year in question is an earlier year, from the contributions paid as mentioned in paragraph (a) of that sub-paragraph.

(5) The earnings factor referred to in paragraph (b) of sub-paragraph (3) above is that which is derived—

(a) if the year in question is 1987-88 or any subsequent year—

(i) from so much of the claimant’s earnings as did not exceed the upper earnings limit and upon which primary Class 1 contributions have been paid or treated as paid or from earnings credited; or

(ii) from Class 2 contributions; and

(b) if the year in question is an earlier year, from the contributions referred to in paragraph (a) of that sub-paragraph.

(6) For the purposes of these conditions—

(a) “the relevant time” is the day in respect of which benefit is claimed;

(b) “the relevant benefit year” is the benefit year in which there falls the beginning of the period of incapacity for work which includes the relevant time.

(7) Where a person makes a claim for incapacity benefit and does not satisfy the first contribution condition (specified in sub-paragraph (2) above) or, as the case may be, the second contribution condition (specified in sub-paragraph (3) above) and, in a later benefit year in which he would satisfy that condition had no such claim been made, he makes a further claim for incapacity benefit, the previous claim shall be disregarded.

(8) Regulations may—

(a) provide for the first contribution condition (specified in sub-paragraph (2) above) to be taken to be satisfied in the case of persons who have been entitled to any prescribed description of benefit during any prescribed period or at any prescribed time;

(b) with a view to securing any relaxation of the requirements of that condition (as so specified) in relation to persons who have been so entitled, provide for that condition to apply in relation to them subject to prescribed modifications.

(9) In sub-paragraph (8)—

“benefit” includes (in addition to any benefit under Parts II to V of this Act)—any benefit under Parts VII to XII of this Act, andcredits under regulations under section 22(5) above;

“modifications” includes additions, omissions and amendments.

Maternity allowance

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

...

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Widowed mother’s allowance, widowed parent’s allowance, bereavement allowance and widow’s pension; retirement pensions (Categories A and B)

5

(1) This paragraph sets out the contribution conditions for—

(a) a widowed mother's allowance, a widowed parent's allowance or a widow's pension;

(b) a Category A retirement pension (other than one in relation to which paragraph 5A applies);

(2) The first condition is that—

(a) the contributor concerned must in respect of any one relevant year have actually paid contributions of a relevant class; and

(b) the earnings factor derived—

(i) if that year is 1987-88 or any subsequent year, from so much of the contributor’s earnings as did not exceed the upper earnings limit and upon which such of those contributions as are primary Class 1 contributions were paid or treated as paid and any Class 2 or Class 3 contributions, or

(ii) if that year is an earlier year, from the contributions referred to in paragraph (a) above,

must be not less than the qualifying earnings factor for that year.

(3) The second condition is that—

(a) the contributor concerned must, in respect of each of not less than the requisite number of years of his working life, have paid or been credited with contributions of a relevant class or been credited (in the case of 1987-88 or any subsequent year) with earnings; and

(b) in the case of each of those years, the earnings factor derived as mentioned in sub-paragraph (4) below must be not less than the qualifying earnings factor for that year.

(4) For the purposes of paragraph (b) of sub-paragraph (3) above, the earnings factor—

(a) in the case of 1987-88 or any subsequent year, is that which is derived from—

(i) so much of the contributor’s earnings as did not exceed the upper earnings limit and upon which such of the contributions mentioned in paragraph (a) of that sub-paragraph as are primary Class 1 contributions were paid or treated as paid or earnings credited; and

(ii) any Class 2 or Class 3 contributions for the year; or

(b) in the case of any earlier year, is that which is derived from the contributions mentioned in paragraph (a) of that sub-paragraph.

(5) For the purposes of the first condition, a relevant year is any year ending before that in which the contributor concerned attained pensionable age or died under that age; and the following table shows the requisite number of years for the purpose of the second condition, by reference to a working life of a given duration—

Duration of working life	Requisite number of years
10 years or less	The number of years of the working life, minus 1.
20 years or less (but more than 10)	The number of years of the working life, minus 2.
30 years or less (but more than 20)	The number of years of the working life, minus 3.
40 years or less (but more than 30)	The number of years of the working life, minus 4.
More than 40 years	The number of years of the working life, minus 5.

(6) The first condition shall be taken to be satisfied if the contributor concerned was entitled to long-term incapacity benefit at any time during—

(a) the year in which he attained pensionable age or died under that age, or

(b) the year immediately preceding that year.

(6A) The first condition shall be taken to be satisfied if the contributor concerned was entitled to main phase employment and support allowance at any time during—

(a) the year in which he attained pensionable age or died under that age, or

(b) the year immediately preceding that year.

(6B) The reference in sub-paragraph (6A) to main phase employment and support allowance is to an employment and support allowance in the case of which the calculation of the amount payable in respect of the claimant includes an addition under section 2(1)(b) or 4(2)(b) of the Welfare Reform Act 2007 (addition where conditions of entitlement to support component or work-related activity component satisfied).

(7) The second condition shall be taken to be satisfied notwithstanding that paragraphs (a) and (b) of sub-paragraph (3) above are not complied with as respects each of the requisite number of years if—

(a) those paragraphs are complied with as respects at least half that number of years ... ; and

(b) in each of the other years the contributor concerned was, within the meaning of regulations, precluded from regular employment by responsibilities at home.

But nothing in this sub-paragraph applies in relation to any benefit to which section 23A above applies.

(7A) Regulations may provide that a person is not to be taken for the purposes of sub-paragraph (7)(b) above as precluded from regular employment by responsibilities at home unless he meets the prescribed requirements as to the provision of information to the Secretary of State.

(8) For the purposes of Parts I to VI of this Act a person’s working life is the period between—

(a) (inclusive) the tax year in which he attained the age of 16; and

(b) (exclusive) the tax year in which he attained pensionable age or died under that age.

5A

(1) This paragraph applies to—

(a) a Category A retirement pension in a case where the contributor concerned attains pensionable age on or after 6th April 2010;

(b) a Category B retirement pension in the cases provided for by any of sections 48A to 51ZA.

(2) The contribution condition for a Category A or Category B retirement pension in relation to which this paragraph applies is that—

(a) the contributor concerned must, in respect of each of not less than 30 years of his working life, have paid or been credited with contributions of a relevant class or been credited (in the case of 1987-88 or any subsequent year) with earnings; and

(b) in the case of each of those years, the earnings factor derived as mentioned in sub-paragraph (3) below must be not less than the qualifying earnings factor for that year.

(3) For the purposes of paragraph (b) of sub-paragraph (2) above, the earnings factor—

(a) in the case of 1987-88 or any subsequent year, is that which is derived from—

(i) so much of the contributor's earnings as did not exceed the upper earnings limit and upon which such of the contributions mentioned in paragraph (a) of that sub-paragraph as are primary Class 1 contributions were paid or treated as paid or earnings credited; and

(ii) any Class 2 or Class 3 contributions for the year; or

(b) in the case of any earlier year, is that which is derived from the contributions mentioned in paragraph (a) of that sub-paragraph.

(4) Regulations may modify sub-paragraphs (2) and (3) above for the purposes of their application in a case where—

(a) the contributor concerned has paid, or been credited with, contributions, or

(b) contributions have been deemed to be, or treated as, paid by or credited to him,

under the National Insurance Act 1946 or the National Insurance Act 1965.

Child’s special allowance

6

(1) The contribution condition for a child’s special allowance is that—

(a) the contributor concerned must in respect of any one relevant year have actually paid contributions of a relevant class; and

(b) the earnings factor derived from those contributions must be not less than that year’s lower earnings limit multiplied by 50.

(2) For the purposes of this condition, a relevant year is any year ending before the date on which the contributor concerned attained pensionable age or died under that age.

Part II — Satisfaction of conditions in early years of contribution

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8

Where a person claims short-term incapacity benefit, he shall be taken to satisfy the first contribution condition for the benefit if on a previous claim for any short-term benefit he has satisfied the first contribution condition for that benefit, by virtue of paragraph 8 of Schedule 3 to the 1975 Act, with contributions of a class relevant to short-term incapacity benefit.

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 4

PART I — CONTRIBUTORY PERIODICAL BENEFITS

PART II — BEREAVEMENT PAYMENT

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III — NON-CONTRIBUTORY PERIODICAL BENEFITS

PART IV — INCREASES FOR DEPENDANTS

PART V — RATES OF INDUSTRIAL INJURIES BENEFIT

SCHEDULE 4A

Part I — The amount

1

(1) The amount referred to in section 45(2)(c) above is to be calculated as follows—

(a) take for each tax year concerned the amount for the year which is found under the following provisions of this Schedule;

(b) add the amounts together;

(d) the resulting amount is the amount referred to in section 45(2)(c) above, except that if the resulting amount is a negative one the amount so referred to is nil.

(2) For the purpose of applying sub-paragraph (1) above in the determination of the rate of any additional pension by virtue of section ... 39C(1) ... or 48B(2) above, in a case where the deceased spouse died under pensionable age or by virtue of section 39C(1) ... or 48B(2) above, in a case where the deceased civil partner died under pensionable age, or by virtue of section 39C(1) above, in a case where the deceased cohabiting partner died under pensionable age, the divisor used for the purposes of sub-paragraph (1)(c) above shall be whichever is the smaller of the alternative numbers referred to below (instead of the number of relevant years).

(3) The first alternative number is the number of tax years which begin after 5th April 1978 and end before the date when the entitlement to the additional pension commences.

(4) The second alternative number is the number of tax years in the period—

(a) beginning with the tax year in which the deceased spouse, civil partner or cohabiting partner attained the age of 16 or, if later, 1978-79; and

(b) ending immediately before the tax year in which the deceased spouse, civil partner or cohabiting partner would have attained pensionable age if he had not died earlier.

(5) For the purpose of applying sub-paragraph (1) above in the determination of the rate of any additional pension by virtue of section 48BB(5) above, in a case where the deceased spouse or civil partner died under pensionable age, the divisor used for the purposes of sub-paragraph (1)(c) above shall be whichever is the smaller of the alternative numbers referred to below (instead of the number of relevant years).

(6) The first alternative number is the number of tax years which begin after 5th April 1978 and end before the date when the deceased spouse or civil partner dies.

(7) The second alternative number is the number of tax years in the period—

(a) beginning with the tax year in which the deceased spouse or civil partner attained the age of 16 or, if later, 1978-79; and

(b) ending immediately before the tax year in which the deceased spouse or civil partner would have attained pensionable age if he had not died earlier.

(8) In this paragraph “relevant year” has the same meaning as in section 44 above.

Part II — Surplus earnings factor

2

(1) This Part of this Schedule applies if for the tax year concerned there is a surplus in the pensioner’s earnings factor.

(2) The amount for the year is to be found as follows—

(a) calculate the part of the surplus for that year falling into each of the bands specified in the appropriate table below;

(b) multiply the amount of each such part in accordance with the last order under section 148 of the Administration Act to come into force before the end of the final relevant year;

(c) multiply each amount found under paragraph (b) above by the percentage specified in the appropriate table in relation to the appropriate band;

(d) add together the amounts calculated under paragraph (c) above.

(3) The appropriate table for persons attaining pensionable age after the end of the first appointed year but before 6th April 2009 is as follows—

Amount of surplus	Amount of surplus	Percentage
Band 1.	Not exceeding LET	40 + 2N
Band 2.	Exceeding LET but not exceeding 3LET - 2QEF	10 + N/2
Band 3.	Exceeding 3LET - 2QEF	20 + N

(4) The appropriate table for persons attaining pensionable age on or after 6th April 2009 where the tax year concerned falls before 2010-11 is as follows—

Amount of surplus	Amount of surplus	Percentage
Band 1.	Not exceeding LET	40
Band 2.	Exceeding LET but not exceeding 3LET - 2QEF	10
Band 3.	Exceeding 3LET - 2QEF	20

(4A) The appropriate table for persons attaining pensionable age on or after 6th April 2009 where the tax year concerned is 2010-11 or a subsequent tax year is as follows—

Amount of surplus	Amount of surplus	Percentage
Band 1	Not exceeding LET	40
Band 2	Exceeding LET ...	10

(5) Regulations may provide, in relation to persons attaining pensionable age after such date as may be prescribed, that the amount found under this Part of this Schedule for the second appointed year or any subsequent tax year is to be calculated using only so much of the surplus in the pensioner’s earnings factor for that year as falls into Band 1 in the table in sub-paragraph (4) above.

(6) For the purposes of the tables in this paragraph—

(a) the value of N is 0.5 for each tax year by which the tax year in which the pensioner attained pensionable age precedes 2009-10;

(b) “LET” means the low earnings threshold for that year as specified in section 44A above;

(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) In the calculation of “2QEF” the amount produced by doubling QEF shall be rounded to the nearest whole £100 (taking any amount of £50 as nearest to the previous whole £100).

(8) In this paragraph “final relevant year” has the same meaning as in section 44 above.

Part III — Contracted-out employment etc

Introduction

3

(1) This Part of this Schedule applies if the following condition is satisfied in relation to each tax week in the tax year concerned.

(2) The condition is that any earnings paid to or for the benefit of the pensioner in the tax week in respect of employment were in respect of employment qualifying him for a pension provided by a salary related contracted-out scheme or by a money purchase contracted-out scheme or by an appropriate personal pension scheme.

(3) If the condition is satisfied in relation to one or more tax weeks in the tax year concerned, Part II of this Schedule does not apply in relation to the year.

The amount

4

The amount for the year is amount C where—

(a) amount C is equal to amount A minus amount B, and

(b) amounts A and B are calculated as follows.

Amount A

5

(1) Amount A is to be calculated as follows.

(2) If there is an assumed surplus in the pensioner’s earnings factor for the year—

(a) calculate the part of the surplus for that year falling into each of the bands specified in the appropriate table below;

(b) multiply the amount of each such part in accordance with the last order under section 148 of the Administration Act to come into force before the end of the final relevant year;

(c) multiply each amount found under paragraph (b) above by the percentage specified in the appropriate table in relation to the appropriate band;

(d) add together the amounts calculated under paragraph (c) above.

(3) The appropriate table for persons attaining pensionable age after the end of the first appointed year but before 6th April 2009 is as follows—

Amount of surplus	Amount of surplus	Percentage
Band 1.	Not exceeding LET	40 + 2N
Band 2.	Exceeding LET but not exceeding 3LET - 2QEF	10 + N/2
Band 3.	Exceeding 3LET - 2QEF	20 + N

(4) The appropriate table for persons attaining pensionable age on or after 6th April 2009 where the tax year concerned falls before 2010-11 is as follows—

Amount of surplus	Amount of surplus	Percentage
Band 1.	Not exceeding LET	40
Band 2.	Exceeding LET but not exceeding 3LET - 2QEF	10
Band 3.	Exceeding 3LET - 2QEF	20

(4A) The appropriate table for persons attaining pensionable age on or after 6th April 2009 where the tax year concerned is 2010-11 or a subsequent tax year is as follows—

Amount of surplus	Amount of surplus	Percentage	Percentage
Band 1	Not exceeding LET	40	40
Band 2	Exceeding LET ...	10	10

Amount B (first case)

6

(1) Amount B is to be calculated in accordance with this paragraph if the pensioner’s employment was entirely employment qualifying him for a pension provided by a salary related contracted-out scheme or by a money purchase contracted-out scheme.

(2) If there is an assumed surplus in the pensioner’s earnings factor for the year—

(a) multiply the amount of the assumed surplus in accordance with the last order under section 148 of the Administration Act to come into force before the end of the final relevant year;

(b) multiply the amount found under paragraph (a) above by the percentage specified in sub-paragraph (3) below.

(3) The percentage is—

(a) 20 + N if the person attained pensionable age after the end of the first appointed year but before 6th April 2009;

(b) 20 if the person attained pensionable age on or after 6th April 2009.

Amount B (second case)

7

(1) Amount B is to be calculated in accordance with this paragraph if the pensioner’s employment was entirely employment qualifying him for a pension provided by an appropriate personal pension scheme.

(2) If there is an assumed surplus in the pensioner’s earnings factor for the year—

(a) calculate the part of the surplus for that year falling into each of the bands specified in the appropriate table below;

(b) multiply the amount of each such part in accordance with the last order under section 148 of the Administration Act to come into force before the end of the final relevant year;

(c) multiply each amount found under paragraph (b) above by the percentage specified in the appropriate table in relation to the appropriate band;

(d) add together the amounts calculated under paragraph (c) above.

(3) The appropriate table for persons attaining pensionable age after the end of the first appointed year but before 6th April 2009 is as follows—

Amount of surplus	Amount of surplus	Percentage
Band 1.	Not exceeding LET	40 + 2N
Band 2.	Exceeding LET but not exceeding 3LET - 2QEF	10 + N/2
Band 3.	Exceeding 3LET - 2QEF	20 + N

(4) The appropriate table for persons attaining pensionable age on or after 6th April 2009 where the tax year concerned falls before 2010-11 is as follows—

Amount of surplus	Amount of surplus	Percentage
Band 1.	Not exceeding LET	40
Band 2.	Exceeding LET but not exceeding 3LET - 2QEF	10
Band 3.	Exceeding 3LET - 2QEF	20

(4A) The appropriate table for persons attaining pensionable age on or after 6th April 2009 where the tax year concerned is 2010-11 or a subsequent tax year is as follows—

Amount of surplus	Amount of surplus	Percentage	Percentage
Band 1	Not exceeding LET	40	40
Band 2	Exceeding LET ...	10	10

Interpretation

8

(1) In this Part of this Schedule “salary related contracted-out scheme”, “money purchase contracted-out scheme” and “appropriate personal pension scheme” have the same meanings as in the Pension Schemes Act 1993.

(2) For the purposes of this Part of this Schedule the assumed surplus in the pensioner’s earnings factor for the year is the surplus there would be in that factor for the year if section 48A(1) of the Pension Schemes Act 1993 (no primary Class 1 contributions deemed to be paid) did not apply in relation to any tax week falling in the year.

(3) Section 44A above shall be ignored in applying section 44(6) above for the purpose of calculating amount B.

(4) For the purposes of this Part of this Schedule—

(a) the value of N is 0.5 for each tax year by which the tax year in which the pensioner attained pensionable age precedes 2009-10;

(b) “LET” means the low earnings threshold for that year as specified in section 44A above;

(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) In the calculation of “2QEF” the amount produced by doubling QEF shall be rounded to the nearest whole £100 (taking any amount of £50 as nearest to the previous whole £100).

(6) In this Part of this Schedule “final relevant year” has the same meaning as in section 44 above.

Part IV — Other cases

9

The Secretary of State may make regulations containing provisions for finding the amount for a tax year in—

(a) cases where the circumstances relating to the pensioner change in the course of the year;

(b) such other cases as the Secretary of State thinks fit.

SCHEDULE 4B

Part 1 — Amount for purposes of section 45(2)(d)

1

(1) The amount referred to in section 45(2)(d) is to be calculated as follows—

(a) calculate the appropriate amount for each of the relevant years within section 45(2)(d) to which Part 2 of this Schedule applies;

(b) calculate the appropriate amount for each of the relevant years within section 45(2)(d) to which Part 3 of this Schedule applies; and

(2) But if the resulting amount is a negative one, the amount referred to in section 45(2)(d) is nil.

Part 2 — Normal rules: employment not contracted-out

Application

2

This Part applies to a relevant year if—

(a) the contracted-out condition is not satisfied in respect of any tax week in the year; and

(b) there is a surplus in the pensioner's earnings factor for the year.

Appropriate amount for year

3

The appropriate amount for the year for the purposes of paragraph 1 is either—

(a) the flat rate amount for the year (if the pensioner's earnings factor for the year does not exceed the LET), or

(b) the sum of the flat rate amount and the earnings-related amount for the year (if that earnings factor exceeds the LET).

4

(1) Where the final relevant year is 2015-16 or an earlier tax year, the flat rate amount for the year is calculated by multiplying the FRAA in accordance with the last order under section 148AA of the Administration Act to come into force before the end of the final relevant year.

(2) Otherwise, the flat rate amount is calculated by increasing the FRAA by the percentage by which earnings factors for 2015-16 are directed to be increased by the last order under section 148 of the Administration Act to come into force before the end of the final relevant year.

5

The earnings-related amount for the year is calculated as follows—

(a) take the part of the earnings factor for the year which exceeds the LET ...;

(b) multiply that amount in accordance with the last order under section 148 of the Administration Act to come into force before the end of the final relevant year;

(d) divide the amount found under paragraph (c) by 44.

Part 3 — Contracted-out employment

Application

6

This Part applies to a relevant year if —

(a) the contracted-out condition is satisfied in respect of each tax week in the year; and

(b) there would be a surplus in the pensioner's earnings factor for the year if section 48A of the Pension Schemes Act 1993 did not apply in relation to any tax week falling in the year.

Appropriate amount for year

7

The appropriate amount for the year for the purposes of paragraph 1 is calculated as follows—

(a) calculate amounts A and B in accordance with paragraphs 8 to 10;

(b) subtract amount B from amount A.

Amount A: assumed earnings factor not exceeding LET

8

(1) Amount A is calculated in accordance with this paragraph if the pensioner's assumed earnings factor for the year does not exceed the LET.

(2) In such a case, amount A is the flat rate amount for the year.

(3) Where the final relevant year is 2015-16 or an earlier tax year, the flat rate amount for the year is calculated by multiplying the FRAA in accordance with the last order under section 148AA of the Administration Act to come into force before the end of the final relevant year.

(4) Otherwise, the flat rate amount is calculated by increasing the FRAA by the percentage by which earnings factors for 2015-16 are directed to be increased by the last order under section 148 of the Administration Act to come into force before the end of the final relevant year.

Amount A: assumed earnings factor exceeding LET

9

(1) Amount A is calculated in accordance with this paragraph if the pensioner's assumed earnings factor for the year exceeds the LET.

(2) In such a case, amount A is calculated as follows—

(a) take the part of the assumed earnings factor for the year which exceeds the LET ...;

(b) multiply that amount in accordance with the last order under section 148 of the Administration Act to come into force before the end of the final relevant year;

(d) divide the amount found under paragraph (c) by 44;

(e) add the amount found under paragraph (d) to the flat rate amount for the year.

(3) Where the final relevant year is 2015-16 or an earlier tax year, the flat rate amount for the year is calculated by multiplying the FRAA in accordance with the last order under section 148AA of the Administration Act to come into force before the end of the final relevant year.

(4) Otherwise, the flat rate amount is calculated by increasing the FRAA by the percentage by which earnings factors for 2015-16 are directed to be increased by the last order under section 148 of the Administration Act to come into force before the end of the final relevant year.

Amount B

10

(1) Amount B is calculated as follows—

(a) take the part of the pensioner's assumed earnings factor for the year which exceeds the QEF ...;

(b) multiply that amount in accordance with the last order under section 148 of the Administration Act to come into force before the end of the final relevant year;

(d) divide the amount found under paragraph (c) by the number of relevant years in the pensioner's working life.

(2) Section 44B is to be ignored in applying section 44(6) for the purposes of this paragraph.

Part 4 — Other cases

11

The Secretary of State may make regulations containing provision for finding for a tax year the amount referred to in section 45(2)(d)—

(a) in cases where the circumstances relating to the pensioner change in the course of the year, and

(b) in such other cases as the Secretary of State thinks fit.

Part 5 — Interpretation

12

In this Schedule—

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“the contracted-out condition”, in relation to a tax week, means the condition that any earnings paid to or for the benefit of the pensioner in that week in respect of employment were in respect of employment qualifying him for a pension provided by a salary related contracted-out scheme (within the meaning of the Pension Schemes Act 1993);

“the FRAA” has the meaning given by paragraph 13;

“the LET”, in relation to a tax year, means the low earnings threshold for the year as specified in section 44A above;

“the QEF”, in relation to a tax year, means the qualifying earnings factor for the year;

“the pensioner's assumed earnings factor”, in relation to a year, means the earnings factor that the pensioner would have for the year if section 48A(1) of the Pension Schemes Act 1993 did not apply in relation to any tax week falling in the year;

“relevant year” and “final relevant year” have the same meanings as in section 44 above;

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13

(1) “The FRAA” means the flat rate accrual amount.

(2) Where the final relevant year is 2015-16 or an earlier tax year, that amount is £72.80 for the flat rate introduction year and subsequent tax years (but subject to section 148AA of the Administration Act).

(3) Otherwise, that amount is £93.60 for the flat rate introduction year and subsequent tax years.

SCHEDULE 5

Choice between increase of pension and lump sum where pensioner’s entitlement is deferred

A1

(1) Where a person’s entitlement to a Category A or Category B retirement pension is deferred and the period of deferment is at least 12 months, the person shall, on claiming his pension or within a prescribed period after claiming it, elect in the prescribed manner either—

(a) that paragraph 1 (entitlement to increase of pension) is to apply in relation to the period of deferment, or

(b) that paragraph 3A (entitlement to lump sum) is to apply in relation to the period of deferment.

(2) If no election under sub-paragraph (1) is made within the period prescribed under that sub-paragraph, the person is to be treated as having made an election under sub-paragraph (1)(b).

(3) Regulations—

(a) may enable a person who has made an election under sub-paragraph (1) (including one that the person is treated by sub-paragraph (2) as having made) to change the election within a prescribed period and in a prescribed manner, if prescribed conditions are satisfied, and

(b) if they enable a person to make an election under sub-paragraph (1)(b) in respect of a period of deferment after receiving any increase of pension under paragraph 1 by reference to that period, may for the purpose of avoiding duplication of payment—

(i) enable an amount determined in accordance with the regulations to be recovered from the person in a prescribed manner and within a prescribed period, or

(ii) provide for an amount determined in accordance with the regulations to be treated as having been paid on account of the amount to which the person is entitled under paragraph 3A.

(4) Where the Category A or Category B retirement pension includes any increase under paragraphs 5 to 6A, no election under sub-paragraph (1) applies to so much of the pension as consists of that increase (an entitlement to an increase of pension in respect of such an increase after a period of deferment being conferred either by paragraphs 1 and 2 or by paragraph 2A).

Increase of pension where pensioner’s entitlement is deferred

1

(1) This paragraph applies where a person’s entitlement to a Category A or Category B retirement pension is deferred and one of the following conditions is met—

(a) the period of deferment is less than 12 months, or

(b) the person has made an election under paragraph A1(1)(a) in relation to the period of deferment.

(2) The rate of the person’s Category A or Category B retirement pension shall be increased by an amount equal to the aggregate of the increments to which he is entitled under paragraph 2, but only if that amount is enough to increase the rate of the pension by at least 1 per cent.

2

(1) Subject to paragraph 3 below, a person is entitled to an increment under this paragraph for each complete incremental period in his period of deferment.

(2) In this Schedule—

“incremental period” means any period of six days which are treated by regulations as days of increment for the purposes of this Schedule in relation to the person and the pension in question; ...

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Subject to paragraph 3 below, the amount of the increment for any such incremental period shall be 1/5th per cent of the weekly rate of the Category A or Category B retirement pension to which that person would have been entitled for the period if his entitlement had not been deferred.

(4) Where an amount is required to be calculated in accordance with the provisions of sub-paragraph (3) above—

(a) the amount so calculated shall be rounded to the nearest penny, taking any 1/2p as nearest to the next whole penny above; and

(b) where the amount so calculated would, apart from this sub-paragraph, be a sum less than 1/2p, that amount shall be taken to be zero, notwithstanding any other provision of this Act, the Pensions Act or the Administration Act.

(5) For the purposes of sub-paragraph (3) above the weekly rate of pension for any period shall be taken—

(a) to include any increase under section 47(1) above and any increase under paragraph 4, 5, 5A, 6 or 6A below, but

(b) not to include any increase under section ... 83A or 85 above or any graduated retirement benefit.

(6) The reference in sub-paragraph (5) above to any increase under subsection (1) of section 47 above shall be taken as a reference to any increase that would take place under that subsection if subsection (2) of that section and section 46(5) of the Pensions Act were disregarded.

(7) Where one or more orders have come into force under section 150 or 150A of the Administration Act during the period of deferment, the rate for any incremental period shall be determined as if the order or orders had come into force before the beginning of the period of deferment.

(8) Where a pensioner’s rights premium is paid in respect of a person who is, or if his entitlement had not been deferred would be, entitled to a Category A or Category B retirement pension, then, in calculating any increment under this paragraph which falls to be paid to him in respect of such a pension after the date on which the premium is paid there shall be disregarded any guaranteed minimum pension to which the pensioner was entitled in connection with the employment to which the premium relates.

2A

(1) This paragraph applies where—

(a) a person’s entitlement to a Category A or Category B retirement pension is deferred,

(b) the pension includes an increase under paragraphs 5 to 6A, and

(c) the person has made (or is treated as having made) an election under paragraph A1(1)(b) in relation to the period of deferment.

(2) The rate of the person’s Category A or Category B retirement pension shall be increased by an amount equal to the aggregate of the increments to which he is entitled under sub-paragraph (3).

(3) For each complete incremental period in the person’s period of deferment, the amount of the increment shall be 1/5th per cent. of the weekly rate of the increase to which the person would have been entitled under paragraphs 5 to 6A for the period if his entitlement to the Category A or Category B retirement pension had not been deferred.

3

(1) Regulations may provide that sub-paragraphs (1) to (3) of paragraph 2 above shall have effect with such additions, omissions and amendments as are prescribed in relation to a person during whose period of deferment there has been a change, other than a change made by such an order as is mentioned in sub-paragraph (7) of that paragraph, in the rate of the Category A or Category B retirement pension to which he would have been entitled if his entitlement to the pension had commenced on attaining pensionable age.

(2) Any regulations under this paragraph may make such consequential additions, omissions and amendments in paragraph 8(3) below as the Secretary of State considers are appropriate in consequence of any changes made by virtue of this paragraph in paragraph 2 above.

Lump sum where pensioner’s entitlement is deferred

3A

(1) This paragraph applies where—

(a) a person’s entitlement to a Category A or Category B retirement pension is deferred, and

(b) the person has made (or is treated as having made) an election under paragraph A1(1)(b) in relation to the period of deferment.

(2) The person is entitled to an amount calculated in accordance with paragraph 3B (a “lump sum”).

Calculation of lump sum

3B

(1) The lump sum is the accrued amount for the last accrual period beginning during the period of deferment.

(2) In this paragraph—

‘accrued amount’ means the amount calculated in accordance with sub-paragraph (3);

‘accrual period’ means any period of seven days beginning with a prescribed day of the week, where that day falls within the period of deferment.

(3) The accrued amount for an accrual period for a person is—

$$(A+P)×(1+R100)52$where—A is the accrued amount for the previous accrual period (or, in the case of the first accrual period beginning during the period of deferment, zero);P is the amount of the Category A or Category B retirement pension to which the person would have been entitled for the accrual period if his entitlement had not been deferred;R is—a percentage rate two per cent. higher than the Bank of England base rate, orif regulations so provide, such higher rate as may be prescribed.$

(4) For the purposes of sub-paragraph (3), any change in the Bank of England base rate is to be treated as taking effect—

(a) at the beginning of the accrual period immediately following the accrual period during which the change took effect, or

(b) if regulations so provide, at such other time as may be prescribed.

(5) For the purposes of the calculation of the lump sum, the amount of Category A or Category B retirement pension to which the person would have been entitled for an accrual period—

(a) includes any increase under section 47(1) and any increase under paragraph 4 of this Schedule, but

(b) does not include—

(i) any increase under section 83A or 85 or paragraphs 5 to 6A of this Schedule,

(ii) any graduated retirement benefit, or

(iii) in prescribed circumstances, such other amount of Category A or Category B retirement pension as may be prescribed.

(6) The reference in sub-paragraph (5)(a) to any increase under subsection (1) of section 47 shall be taken as a reference to any increase that would take place under that subsection if subsection (2) of that section and section 46(5) of the Pensions Act were disregarded.

Choice between increase of pension and lump sum where pensioner’s deceased spouse or civil partner has deferred entitlement

3C

(1) Subject to paragraph 8, this paragraph applies where—

(a) a widow, widower or surviving civil partner (“W”) is entitled to a Category A or Category B retirement pension,

(b) W was married to or was the civil partner of the other party to the marriage or civil partnership (“S”) when S died,

(d) S’s entitlement had been deferred throughout the period of 12 months ending with the day before S’s death.

(2) W shall within the prescribed period elect in the prescribed manner either—

(a) that paragraph 4 (entitlement to increase of pension) is to apply in relation to S’s period of deferment, or

(b) that paragraph 7A (entitlement to lump sum) is to apply in relation to S’s period of deferment.

(3) If no election under sub-paragraph (2) is made within the period prescribed under that sub-paragraph, W is to be treated as having made an election under sub-paragraph (2)(b).

(4) Regulations—

(a) may enable a person who has made an election under sub-paragraph (2) (including one that the person is treated by sub-paragraph (3) as having made) to change the election within a prescribed period and in a prescribed manner, if prescribed conditions are satisfied, and

(b) if they enable a person to make an election under sub-paragraph (2)(b) in respect of a period of deferment after receiving any increase of pension under paragraph 4 by reference to that period, may for the purpose of avoiding duplication of payment—

(i) enable an amount determined in accordance with the regulations to be recovered from the person in a prescribed manner and within a prescribed period, or

(ii) provide for an amount determined in accordance with the regulations to be treated as having been paid on account of the amount to which the person is entitled under paragraph 7A.

(5) The making of an election under sub-paragraph (2)(b) does not affect the application of paragraphs 5 to 6A (which relate to an increase in pension where the pensioner’s deceased spouse or civil partner had deferred an entitlement to a guaranteed minimum pension).

Increase of pension where pensioner’s deceased spouse or civil partner has deferred entitlement

4

(1) Subject to paragraph 8, this paragraph applies where a widow, widower or surviving civil partner (“W”) is entitled to a Category A or Category B retirement pension and was married to or was the civil partner of the other party to the marriage or civil partnership (“S”) when S died and one of the following conditions is met—

(a) S was entitled to a Category A or Category B retirement pension with an increase under this Schedule,

(b) W is a widow, widower or surviving civil partner to whom paragraph 3C applies and has made an election under paragraph 3C(2)(a), or

(c) paragraph 3C would apply to W but for the fact that the condition in sub-paragraph (1)(d) of that paragraph is not met.

(1A) Subject to sub-paragraph (3), the rate of W’s pension shall be increased—

(a) in a case falling within sub-paragraph (1)(a), by an amount equal to the increase to which S was entitled under this Schedule, apart from paragraphs 5 to 6A ... ,

(b) in a case falling within sub-paragraph (1)(b), by an amount equal to the increase to which S would have been entitled under this Schedule, apart from paragraphs 5 to 6A ... , if the period of deferment had ended immediately before S’s death and S had then made an election under paragraph A1(1)(a), or

(c) in a case falling within sub-paragraph (1)(c), by an amount equal to the increase to which S would have been entitled under this Schedule, apart from paragraphs 5 to 6A ... , if the period of deferment had ended immediately before S’s death.

(3) If a married person dies after 5th October 2002 or a civil partner dies on or after 5th December 2005, the rate of the retirement pension for that person’s widow, widower or surviving civil partner shall be increased by an amount equivalent to the sum of—

(a) the increase in the basic pension to which the deceased spouse or civil partner was entitled; and

(b) one-half of the increase in the additional pension.

(4) In any case where—

(a) there is a period between the death of the former spouse or civil partner and the date on which the surviving spouse or civil partner becomes entitled to a Category A or Category B retirement pension, and

(b) one or more orders have come into force under section 150 of the Administration Act during that period,

the amount of the increase to which the surviving spouse or civil partner is entitled under this paragraph shall be determined as if the order or orders had come into force before the beginning of that period.

(5) This paragraph does not apply in any case where the deceased spouse died before 6th April 1979 and the widow or widower attained pensionable age before that date.

5

(1) Where—

(a) a widow, widower or surviving civil partner (call that person “W”) is entitled to a Category A or Category B retirement pension and was married to or was the civil partner of the other party to the marriage or civil partnership (call that person “S”) when S died, and

(b) S either—

(i) was entitled to a guaranteed minimum pension with an increase under section 15(1) of the Pensions Act, or

(ii) would have been so entitled if S had retired on the date of S’s death,

the rate of W’s pension shall be increased by the following amount.

(2) The amount is—

(a) where W is a woman—

(i) whose deceased spouse was a man, or

(ii) who falls within paragraph 7(3) below,

an amount equal to the sum of the amounts set out in paragraph 5A(2) or (3) below (as the case may be),

(b) where W is a man whose deceased spouse was a woman, an amount equal to the sum of the amounts set out in paragraph 6(2), (3) or (4) below (as the case may be) , and

(i) a woman who does not fall within paragraph 7(3) below and whose deceased spouse was a woman;

(ii) a man whose deceased spouse was a man; or

(iii) a surviving civil partner,

an amount equal to the sum of the amounts set out in paragraph (6A)(2) below.

5A

(1) This paragraph applies where W (referred to in paragraph 5 above) is a woman—

(a) whose deceased spouse was a man, or

(b) who falls within paragraph 7(3) below.

(2) Where the spouse dies before 6th October 2002, the amounts referred to in paragraph 5(2)(a) above are the following—

(a) an amount equal to one-half of the increase mentioned in paragraph 5(1)(b) above,

(b) the appropriate amount, and

(3) Where the spouse dies after 5th October 2002, the amounts referred to in paragraph 5(2)(a) above are the following—

(a) one-half of the appropriate amount ... , and

(b) one-half of any increase to which the spouse had been entitled under paragraph 5 above.

6

(1) This paragraph applies where W (referred to in paragraph 5 above) is a man whose deceased spouse was a woman.

(2) Where the wife dies before 6th April 1989, the amounts referred to in paragraph 5(2)(b) above are the following—

(a) an amount equal to the increase mentioned in paragraph 5(1)(b) above,

(b) the appropriate amount, and

(3) Where the wife dies after 5th April 1989 but before 6th October 2002, the amounts referred to in paragraph 5(2)(b) above are the following—

(a) the increase mentioned in paragraph 5(1)(b) above, so far as attributable to employment before 6th April 1988,

(b) one-half of that increase, so far as attributable to employment after 5th April 1988,

(d) any increase to which the wife had been entitled under paragraph 5 above.

(4) Where the wife dies after 5th October 2002, the amounts referred to in paragraph 5(2)(b) above are the following—

(a) one-half of the increase mentioned in paragraph 5(1)(b) above, so far as attributable to employment before 6th April 1988,

(b) one-half of the appropriate amount ... , and

6A

(1) This paragraph applies where W (referred to in paragraph 5 above) is—

(a) a woman who does not fall within paragraph 7(3) below and whose deceased spouse was a woman;

(b) a man whose deceased spouse was a man; or

(2) The amounts referred to in paragraph 5(2)(c) above are the following—

(a) one-half of the increase mentioned in paragraph 5(1)(b) above, so far as attributable to employment before 6th April 1988,

(b) one-half of the appropriate amount ... , and

7

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) Where an amount is required to be calculated in accordance with the provisions of paragraph 5, 5A, 6 or 6A or sub-paragraph (1) above—

(a) the amount so calculated shall be rounded to the nearest penny, taking any 1/2p as nearest to the next whole penny above; and

(b) where the amount so calculated would, apart from this sub-paragraph, be a sum less than 1/2p, that amount shall be taken to be zero, notwithstanding any other provision of this Act, the Pensions Act or the Administration Act.

(3) For the purposes of paragraphs 5, 5A and 6A above, a woman falls within this sub-paragraph if—

(a) she was married to another woman who, at the time of her death, was a woman by virtue of a full gender recognition certificate having been issued under the Gender Recognition Act 2004, and

(b) that marriage subsisted before the time when that certificate was issued.

7ZA

(1) This paragraph modifies paragraphs 5A to 6A in cases where—

(a) W became entitled to a Category A or Category B retirement pension before 6 April 2012, and

(b) S died before 6 April 2012.

(“W” and “S” have the same meaning as in paragraph 5.)

(2) Paragraph 5A applies as if—

(a) in sub-paragraph (2), after paragraph (a), there were inserted—

(b) the appropriate amount; and

;

(b) in sub-paragraph (3), after “following—”, there were inserted—

(a) one half of the appropriate amount; and

(3) Paragraph 6 applies as if—

(a) in sub-paragraph (2), after paragraph (a), there were inserted—

(b) the appropriate amount; and

;

(b) in sub-paragraph (3), after paragraph (b), there were inserted—

(c) the appropriate amount reduced by the amount of any increases under section 109 of the Pensions Act; and

;

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