ESM8235 - BAsic principles: how to work out the deemed payment: step eight - example using step by step guide
Ms G is a worker whose service company has earned income from a relevant engagement. The service company paid her a salary of £3,000 during the year. The amount at Step Seven is £30,000. This produces the following figures:
- | Amount |
|---|---|
Earnings to date | £3,000 |
The amount at Step Seven | £30,000 |
The secondary Class 1 NICs threshold | £5,000 |
The secondary Class 1 NICs percentage rate | 0.15% |
Using the template at ESM8230 the calculation is as follows:
What to do | Box number | Amount |
|---|---|---|
Enter in this box the earnings to date | 1 | 3000 |
Enter in this box the amount at Step Seven | 2 | 30000 |
Enter in this box the secondary Class 1 NICs earnings threshold | 3 | 5000 |
Enter in this box the secondary Class 1 NICs percentage rate | 4 | 0.15% |
Deduct the figure in box 1 from the figure in box 3 and enter the result in this box | 5 | 2000 |
Deduct the figure in box 5 from the figure in box 2 and enter the result in this box | 6 | 28000 |
Multiply the figure in box 6 by 100 and enter the result in this box | 7 | 2800000 |
Add 100 to the figure in box 4 and enter the result in this box | 8 | 115 |
Divide the figure in box 7 by the figure in box 8 and enter the result in this box | 9 | 24348 |
Add the figure in box 9 to the figure in box 5 and enter the result in this box (a) | 10 | 26348 |
Deduct the figure in box 10 from the amount at box 2 (b) | 11 | 3652 |
(a) this is the amount of the deemed payment - £26,348
(b) this is the amount of secondary Class 1 NICs due on the deemed payment - £3,652
Note - 2025-26 NICs rates used in example calculation.