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The Social Security (Contributions) (Amendment No 4) Regulations 2008 (SI 2008/1431) add to the provisions for what constitutes earnings for Class 1 NICs purposes.

The Regulations amend the Social Security (Contributions) Regulations 2001 to provide in Great Britain a disregard, in the computation of earnings for Class 1 National Insurance contributions, for any Up-Front Childcare Fund payment.

These regulations will come into force on 1 July 2008.

Lone parents moving into work often face up-front childcare costs, such as registration fees, advance payments and a deposit, before receiving any earnings. The level of these up-front costs required by childcare providers can act as a barrier to work. From July 2008, the Department for Work and Pensions will launch the Up-Front Childcare Fund for lone parents as a pilot, initially running in the six Jobcentre Plus Districts in London, to provide up-front financial support for childcare for those lone parents who meet the eligibility criteria.

The Government will make payments of Up-Front Childcare Fund payments directly to a lone parent’s childcare provider. The lone parent must have been receiving benefit for 6 months, be participating in the New Deal for Lone Parents and moving into work of at least 16 hours per week. Payments up to a maximum amount will only be made for childcare provided by registered or approved childcare providers for registration fees, deposits and advance payments.

Providing a disregard for Class 1 National Insurance liability in respect of Up-Front Childcare Fund payments will ensure that the financial support fully meets the up-front cost of childcare and will remove additional complexity for lone parents as they move into work.