The Social Security (Contributions) (Amendment No. 6) Regulations 2025
These regulations amend the 2001 Social Security (Contributions) Regulations to exclude compensation payments made under the Horizon Convictions Redress Scheme from National Insurance Contribution calculations.
This applies to individuals whose Horizon System-related convictions have been quashed, those cautioned, or those who received alternatives to prosecution in Scotland, even if the alternative to prosecution was purported rather than formal.
The amendment ensures that such compensation payments do not impact the individuals' National Insurance liability.
Arguments For
Intended benefit: Clarifies the application of the Horizon Convictions Redress Scheme's compensation payments to National Insurance Contributions calculations, ensuring fairness for those wrongly convicted.
Evidence cited: References specific sections of the Social Security Contributions and Benefits Act 1992 and the Social Security Contributions and Benefits (Northern Ireland) Act 1992, along with the Social Security (Contributions) Regulations 2001. The regulations also cite the relevant sections of the Post Office (Horizon System) Offences (Scotland) Act 2024.
Implementation method: The regulations amend paragraph 31 of Part 10 of Schedule 3 to the Social Security (Contributions) Regulations 2001.
Legal/historical basis: The regulations are made under the powers conferred by sections 3(2) and (3) of the Social Security Contributions and Benefits Act 1992 and the Social Security Contributions and Benefits (Northern Ireland) Act 1992.
Arguments Against
Potential impacts: Could marginally reduce National Insurance Contributions collected, impacting government revenue. However the financial amount is likely to be small.
Implementation challenges: Minimal implementation challenges are anticipated as the amendment is a targeted clarification rather than a significant policy shift.
Alternative approaches: Potentially, other approaches could have been taken to deal with the payments as they relate to National Insurance.
Unintended effects: Unlikely to produce any significant unintended consequences given its focus on specifically addressing the implications of the Horizon Convictions Redress Scheme.
The Treasury make these Regulations in exercise of the powers conferred by section 3(2) and (3) of the Social Security Contributions and Benefits Act 19921, and section 3(2) and (3) of the Social Security Contributions and Benefits (Northern Ireland) Act 19922 and now exercisable by them.
The Secretary of State and the Department for Communities concur in the making of these Regulations.
The Treasury created these regulations using the authority granted by sections 3(2) and (3) of the Social Security Contributions and Benefits Acts of 1992 (for both England & Wales, and Northern Ireland).
The Secretary of State and the Department for Communities approved these regulations.
These Regulations may be cited as the Social Security (Contributions) (Amendment No. 6) Regulations 2025 and come into force on 7th August 2025.
These regulations are officially titled the Social Security (Contributions) (Amendment No. 6) Regulations 2025 and became law on August 7th, 2025.
In paragraph 31 of Part 10 of Schedule 3 to the Social Security (Contributions) Regulations 2001 (payments to be disregarded in the calculation of earnings for the purposes of earnings-related contributions)3, for sub-paragraph (1) substitute—
“(1) A payment of compensation made by the Department for Business and Trade to a person eligible under the Horizon Convictions Redress Scheme announced by His Majesty’s Government on 13th March 2024 who—
(a) has a conviction involving the Horizon System4 quashed by legislation or by a court,
(b) received a caution of any kind for an offence involving the Horizon system,
(c) in Scotland received an alternative to prosecution within the definition given in section 4(5) of the Post Office (Horizon System) Offences (Scotland) Act 20245, or received a purported alternative to prosecution from Post Office Limited6, or
(d) was the subject of a criminal prosecution involving the Horizon system but was not convicted.”
This section amends existing regulations.
Specifically, it alters paragraph 31 of Part 10, Schedule 3 of the 2001 Social Security (Contributions) Regulations, which covers payments disregarded when calculating earnings for National Insurance.
The amendment adds that compensation paid under the Horizon Convictions Redress Scheme is to be disregarded.
This includes compensation for those with quashed convictions, cautions, alternatives to prosecution (including purported alternatives in Scotland), or those prosecuted but not convicted, all relating to the Horizon system.
Nicholas Dakin
Jeff Smith
Two of the Lords Commissioners of His Majesty's Treasury
15th July 2025
These are the signatures and titles of the Lords Commissioners of His Majesty's Treasury who approved the regulations, along with the date of signing.
The Secretary of State concurs as indicated in the preamble.
Signed by authority of the Secretary of State for Work and Pensions.
Stephen Timms
Minister of State
Department for Work and Pensions
14th July 2025
The Secretary of State for Work and Pensions confirms agreement with the regulations, as stated in the introduction.
The signature of the Minister of State and Department are shown, along with the date.
The Department for Communities concurs as indicated in the preamble.
Sealed with the Official Seal of the Department for Communities on 11th July 2025.
David Tarr
A senior officer for the Department for Communities
11th July 2025
The Department for Communities also confirms agreement, as outlined in the preamble.
The official seal and signature of a senior officer are included, together with the date.
These Regulations amend the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004) to clarify that payments of compensation made under the Horizon Convictions Redress Scheme will be disregarded in the calculation of earnings for the purpose of establishing liability to Class 1 National Insurance Contributions for an expanded group of people eligible under the Scheme. Payments will be made under the Scheme by the Department for Business and Trade to persons who have had a conviction involving the Horizon system quashed, whether by legislation or by the courts, received a caution of any kind, received an alternative to prosecution or a purported alternative to prosecution in Scotland and to persons who were the subject of a criminal prosecution involving the Horizon system but were not convicted.
A Tax Information and Impact Note has not been prepared for this instrument as it contains no substantive changes to NICs policy.
This explanatory note summarizes changes.
Specifically, it clarifies that compensation from the Horizon Convictions Redress Scheme is excluded from National Insurance Contribution calculations.
Those whose convictions were overturned and those receiving cautions or non-prosecution orders qualify.
A separate Tax Information and Impact Note was not issued because the amendment does not alter National Insurance Contribution policy in any significant way.
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