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HMRC internal manual

National Insurance Manual

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HM Revenue & Customs
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Class 1 Structural Overview from 6 April 2003: Assessing primary Class 1 NICs from April 2003: Example: Earnings are occasionally above the Upper Earnings Limit

Mr A Adams is an employee in a non contracted-out employment with earnings of £3,000per month. He is employed for the whole of the 2003/2004 tax year.

In April 2003 the following primary Class 1 NICs will be due:

Earnings on which the main primary percentage is payable:

£2579 (monthly UEL) less £385 (monthly PT) = £2194   
£2194 x 11% (main primary percentage) = £241.34 

Earnings on which the additional primary percentage is payable:

£3000 (total earnings) less £2579 (monthly UEL) = £421   
£421 x 1% (additional primary percentage) = £4.21

Total primary payable for April 2003 = £245.55 (that is £241.34 + £4.21)

As Mr Adams remains employed for the whole of the 2003/2004 tax year with the sameemployer, the following primary Class 1 NICs will be due:

£245.55 x 12 monthly deductions = £2946.60

For the 2003/2004, Mr Adams will have paid:

  • main primary NICs amounting to £2896.08
  • additional primary NICs amounting of £50.52

See NIM01116 for general information relating to thisexample.