Social Security (Contributions) (Amendment) Regulations SI 2018/120

The Social Security (Contributions) (Amendment) Regulations SI 2018/120 were laid on 1 February, and came into force from 6 April 2018. The regulations make three changes to National Insurance contributions (NICs):

• to align the NICs treatment of salary sacrifice schemes with the way these schemes are subject to income tax, following changes made to their tax treatment by Finance Act 2017.
• to make consequential changes to the NICs treatment of childcare vouchers provided by an employer, in line with changes to be made to the income tax treatment of employer supported childcare.
• to ensure that employers continue to be exempted from having to pay Class 1A NICs where a sportsperson in their employ receives payments from a sporting testimonial organised by an independent committee. Employers’ potential liability to this NICs charge was an unintended consequence of a reform to the taxation of sporting testimonial payments in 2017, but the current statutory provision to ensure employers are not liable for this charge applies for the tax year 2017/18 only.

There has been quite a lot of comment, not about the regulations themselves, but about the policy underpinning the second of these changes – the Government’s decision to introduce a new scheme to support parents’ childcare costs - Tax Free Childcare - and its intention to close employer-supported childcare (ESC) to new applicants from April 2018. This issue is examined at length in, Childcare Vouchers and Tax-Free Childcare - Frequently Asked Questions, Commons Briefing Paper CBP8055, 20 April 2018.

On 13 March the House considered and approved four statutory instruments, including these regulations.[1] On this occasion the Government announced that it would defer the closure of ESC schemes to new applicants for six months, until October 2018.[2]

Notes :

[1] HC Deb 13 March 2018 cc755-823

[2] See also, Employer Supported Childcare Written Statement HCWS616, 29 March 2018