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HMRC internal manual

National Insurance Manual

Class 1 Structural Overview from 6 April 2003: Assessing primary Class 1 NICs from 6 April 2003.


From 6 April 2003, primary Class 1 NICs are payable on all earnings paid in an earnings period which exceed the Primary Threshold. The amount of Class 1 NICs payable depends upon the level of earnings. This means that, from 6 April 2003, the Upper Earnings Limit is effectively removed for the purposes of calculating the amount of primary Class 1 contributions due in an earnings period.

Guidance on:


  • the Primary Threshold is provided at NIM01008
  • the Upper Earnings Limit is provided at NIM01009
  • earnings periods is provided at NIM01003.

The amount of Class 1 NICs due from 6 April 2003 remains to be calculated in the earnings period in which the earnings are paid. The amount due is the aggregate of the:

  • main primary percentage on so much of the earnings as exceeds the Primary Threshold but does not exceed the Upper Earnings Limit and
  • additional primary percentage on all of the earnings above the Upper Earnings Limit.

The additional primary percentage is payable only where the earnings in the relevant earnings period exceed the Upper Earnings Limit. This means that it is possible for a primary contributor to pay additional primary NICs at 1% even though they may not earn in excess of 52 (or 53) times the Upper Earnings Limit in any one tax year.

There is no limit on the amount of additional primary Class 1 NICs payable. The amount of this uncapped liability is determined by the amount of earnings in excess of the Upper Earnings Limit paid in the relevant earnings period. The greater the earnings, the greater the amount of additional primary contributions that will be due.

Examples of the calculation are given at NIM01115.