§ Lord Vinson
asked Her Majesty's Government:
Why, if in aggregate national insurance (NI) contributions are not payable (by employer or employee) on annual incomes under approximately £3,170, automatic deductions of NI made under the PAYE system when weekly earnings exceed 1/52 of £3,170 are not refundable as is income tax which had been collected in the same way.
§ Lord Mackay of Ardbrecknish
The national insurance contributions are not refundable because, unlike PAYE income tax, liability for Class 1 contributions is non-cumulative and depends on the frequency of employees' pay periods and the level of their earnings in each of those periods. Weekly paid employees and their employers pay Class 1 contributions on each occasion that the employees' weekly earnings equal or exceed the weekly lower earnings limit (currently £61), whether or not their total annual earnings from the employment reach 52 times the weekly lower earnings limit (currently £3,172). These contributions, and any other Class 1 contributions, Class 2 contributions for periods of self-employment and Class 3 voluntary contributions paid in the same contribution year, count towards making that year a qualifying year for entitlement to contributory social security benefits. Refunding Class 1 contributions paid in any weekly paid employment with annual earnings less than the annual lower earnings limit could result in that year not being a qualifying year for benefit purposes.