NIM01150 | Class 1 structural overview from 6 April 2003 to 5 April 2009: structural changes: effect on entitlement to contributory benefits

Section 8 of the Social Security Contributions and Benefits Act 1992 (SSCBA 1992)

National Insurance Contributions Act 2002 (NICA 2002)

The introduction of the additional primary percentage applicable to earnings above the Upper Earnings Limit (UEL) had no effect on a contributor’s entitlement to claim contributory benefits.

As part of the changes to the structure of Class 1 NICs, the NICA 2002 ensured that entitlement to contributory benefit continued to be calculated on earnings but only on those earnings:

• that attract a Class 1 NICs liability at the main primary percentage. That is, on earnings between the Primary Threshold and the UEL or

• on which Class 1 NICs are treated as paid. That is on earnings at or above the Lower Earnings Limit but at or below the Primary Threshold.

Earnings above the UEL, on which the additional primary percentage is paid, do not give rise to contributory benefit entitlement.

All enquiries about the qualifying conditions for contributory benefit should be referred to the Department for Work and Pensions. Contributors who ask about the effect of Class 1 liability on their entitlement to contributory benefit can be advised that earnings above the Upper Earnings Limit do not count towards benefit entitlement.

Background information on the changes introduced by the National Insurance Contributions Act 2002 can be found at NIM01102.