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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 B Brown is an employee in a non contracted-out employment with earnings of £2,000per month. He is employed for the whole of the 2003/2004 tax year and in March 2004receives his annual bonus of £12000.

From April to February 2004 the following primary Class 1 NICs will be due:

Earnings on which the main primary percentage is payable:

£2000 (monthly earnings) less £385 (monthly PT) = £1615   
£1615 x 11% (main primary percentage) = £177.65   
Total primary payable from April to February = £1954.15

In March the following primary 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:

£14,000 (total earnings) less £2579 (monthly UEL) = £11421   
£11421 x 1% (additional primary percentage) = £114.21

Total primary payable for March = £355.55 (that is £241.34 + £114.21)

Total primary payable for 2003/2004 = £2309.70 (that is £1954.15 + £355.55)

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

  • main primary NICs amounting to £2195.49 (that is, £1954.15 + £241.34)
  • additional primary NICs amounting of £114.21

See NIM01116 for general information relating to thisexample.