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In his Budget speech on 20 March 2013 the Chancellor, George Osborne, announced the introduction of a new Employment Allowance: from April 2014 businesses, charities and community sports clubs would be entitled to claim up to £2,000 from their annual payment of secondary Class 1 National Insurance contributions (NICs). Class 1 NICs are paid by both employees and employers on the employee’s earnings. The employee’s share is known as the primary contribution, the employer’s as the secondary contribution. Employers are liable to pay secondary Class 1 NICs at 13.8% on all employee earnings above the secondary threshold, set at £148 a week. This tax cut is estimated to cost £1.26 billion in 2014/15, rising to £1.73 billion by 2017/18.

The main purpose of the National Insurance Contributions Bill 2013-14 is to implement the new allowance. The Bill also contains a number of miscellaneous measures announced in Budget 2013 relating to the scope of NICs.

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