delete The Social Security (Contributions) (Amendment No. 2) Regulations 2005
Amends Social Security (Contributions) Regulations 2001 to exempt certain employer payments to employees in full-time education from Class 1A National Insurance contributions. Establishes conditions including: minimum 1 academic year course duration, 20+ weeks attendance required, establishment open to public with multiple courses, employer not running the establishment, earnings not exceeding £15,000 annually (excluding tuition), and exclusion for payments related to work performed.
This regulation creates a distortionary exemption from employer National Insurance contributions for educational assistance payments, favoring a specific compensation structure over others. The arbitrary £15,000 threshold, 20-week attendance requirement, and conditions on establishment ownership introduce complexity while picking winners. Without this exemption, such payments would simply be treated as regular earnings—simpler and more neutral. The regulation represents regulatory complexity that favors certain employee-educational arrangements over others, distorting labor market decisions and creating opportunities for tax planning rather than genuine educational benefit. The 13.8% Class 1A relief on these payments is effectively a subsidy for educational attendance arrangements that market forces should determine without regulatory intervention.