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Subsection (1) targets the New Deal 50plus scheme.

Subsection (2) provides that payments of employment credits and training grants under the scheme will not be chargeable to tax.

Subsection (3) provides for the exemption to take effect for payments made on or after 25 October 1999 the date the scheme commenced.

New Deal 50plus is a scheme set up by the Department for Education and Employment (DfEE) aimed at people aged 50 or over who have been out of work for six months or more. Individuals are eligible if they are in receipt of benefits (Jobseeker’s Allowance, Incapacity Benefit, Severe Disablement Allowance or Income Support). Dependent partners of benefit recipients may also be eligible for the programme. The participants in the scheme will receive help in their job search from personal advisers and help with finding employment or self-employment.

New Deal 50plus started in nine ‘pathfinder’ areas on 25 October 1999, before the national rollout on 3 April 2000.

New Deal 50plus offers a package of help consisting of

This Clause is concerned with the last two elements.

Those returning to work full-time (30 hours or more per week) will be eligible for a £60 per week employment credit cash payment for up to a year when they are back in work. Those taking up part-time (16 — 30 hours per week) work will be eligible for a £40 per week employment credit cash payment for up to a year. There will be an upper income limit for eligibility; this is currently set at £15,000.

A training grant of up to £750 will also be available to participants of the scheme who move into work. The training grant will be split into two parts of £600 and £150.

The £600 is an in-work training grant and will be paid to reimburse actual expenditure on training. It will be possible for the £600 to be paid to either the employee/self-employed person, the employer or directly to the training provider.

The remaining £150 will be paid directly to the participant at the end of a year of receiving employment credit. It will be deposited into an Individual Learning Account - another DfEE initiative due to come on stream this year. Individual Learning Accounts will be accounts set up by employees and the self employed through which training arranged through DfEE may be obtained at discounted costs.

Under current tax rules, where the recipient is self employed, the employment credit and training grant will be chargeable as part of the individual’s trading receipts (Schedule D, Cases 1/11). And where the recipient is an employee there is a possibility that the employment credit and training grant might be chargeable as a benefit under the current tax rules (Schedule E).

There is also the possibility of these receipts falling within a charge to NICs.

The Paymaster General, Dawn Primarolo, made an announcement on 22 October 1999 that there would be no charge to NICs or tax on the payments received under the scheme (Inland Revenue press release of that date.). Employment income and trading profits of the self employed will be chargeable to tax and liable to NICs in the normal way.

S.I.1999 No.2736 (Social Security, The Social Security (Contributions) (Amendment No.5) Regulations 1999) providing for the NIC exemption for Great Britain was laid on 4 October 1999. S.I. 2000 No. 346 (Social Security, Northern Ireland, The Social Security (Contributions)(Amendment No.2) (Northern Ireland) Regulations 2000) was laid on 14 February 2000. Clause 81 of the Finance Bill complements the NIC measures.

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