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HMRC internal manual

National Insurance Manual

Class 1 Structural Overview - post April 2003: Structural changes: The Class 1 and 2 annual maximum: The calculation method

Regulation 21(3), SS(C)R 2001

[## Regulation 21(3), SS(C)R 2001

](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim01160)

explains that from 6 April 2003 each contributor who, in the relevant tax year, was employed in more than one employment will have an individualised maximum liability for either Class 1 contributions or Class 1 and Class 2 contributions.

To determine a person’s maximum contribution liability for a tax year from 2003/2004 onwards,the following calculation is used:

Step 1

Deduct the relevant weekly Primary Threshold from the relevant weekly Upper Earnings Limit and multiply that figure by 53.

(Here ‘relevant’ means the Primary Threshold and Upper Earnings Limit in forceduring the year for which the maximum is being calculated.)

Step 2

Multiply the result of step 1 by the main primary percentage (11% for tax years 2003-04 to 2010-11 inclusive and 2% for tax years 2011-12 onwards)

Step 3

Add together so much of the person’s earnings from each employed earner’s employment as exceeded the Primary Threshold but did not exceed the Upper Earnings Limit.

Step 4

Deduct from the total found at step 3 the amount found at step 1.

Step 5

If the figure produced at step 4 is a positive figure multiply that figure by the additional primary percentage (1% for tax years 2003-04 to 2010-11 inclusive and 12% for tax years 2011-12 onwards).

If the figure produced by step 4 is a negative figure, it is treated for the purposes of step 8 as nil

Step 6

Add together so much of the person’s earnings from each employed earner’semployment as exceeded the Upper Earnings Limit.

Step 7

Multiply the result of step 6 by the additional primary percentage (1% or 2%, depending on the tax year)

Step 8

Add together the results of steps 2, 5 and 7.

The result of step 8 is the maximum amount of Class 1 or Class 1 and 2 contributions that an earner can pay in respect of the tax year.

The exception to this is where the earner is either in:

  • contracted-out employment, see [## Regulation 21(3), SS(C)R 2001

[## Regulation 21(3), SS(C)R 2001

](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim01160)

explains that from 6 April 2003 each contributor who, in the relevant tax year, was employed in more than one employment will have an individualised maximum liability for either Class 1 contributions or Class 1 and Class 2 contributions.

To determine a person’s maximum contribution liability for a tax year from 2003/2004 onwards,the following calculation is used:

Step 1

Deduct the relevant weekly Primary Threshold from the relevant weekly Upper Earnings Limit and multiply that figure by 53.

(Here ‘relevant’ means the Primary Threshold and Upper Earnings Limit in forceduring the year for which the maximum is being calculated.)

Step 2

Multiply the result of step 1 by the main primary percentage (11% for tax years 2003-04 to 2010-11 inclusive and 2% for tax years 2011-12 onwards)

Step 3

Add together so much of the person’s earnings from each employed earner’s employment as exceeded the Primary Threshold but did not exceed the Upper Earnings Limit.

Step 4

Deduct from the total found at step 3 the amount found at step 1.

Step 5

If the figure produced at step 4 is a positive figure multiply that figure by the additional primary percentage (1% for tax years 2003-04 to 2010-11 inclusive and 12% for tax years 2011-12 onwards).

If the figure produced by step 4 is a negative figure, it is treated for the purposes of step 8 as nil

Step 6

Add together so much of the person’s earnings from each employed earner’semployment as exceeded the Upper Earnings Limit.

Step 7

Multiply the result of step 6 by the additional primary percentage (1% or 2%, depending on the tax year)

Step 8

Add together the results of steps 2, 5 and 7.

The result of step 8 is the maximum amount of Class 1 or Class 1 and 2 contributions that an earner can pay in respect of the tax year.

The exception to this is where the earner is either in:

  • contracted-out employment, see](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim01164) or
  • a married woman/widow paying reduced rate NICs, see [## Regulation 21(3), SS(C)R 2001

[## Regulation 21(3), SS(C)R 2001

](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim01160)

explains that from 6 April 2003 each contributor who, in the relevant tax year, was employed in more than one employment will have an individualised maximum liability for either Class 1 contributions or Class 1 and Class 2 contributions.

To determine a person’s maximum contribution liability for a tax year from 2003/2004 onwards,the following calculation is used:

Step 1

Deduct the relevant weekly Primary Threshold from the relevant weekly Upper Earnings Limit and multiply that figure by 53.

(Here ‘relevant’ means the Primary Threshold and Upper Earnings Limit in forceduring the year for which the maximum is being calculated.)

Step 2

Multiply the result of step 1 by the main primary percentage (11% for tax years 2003-04 to 2010-11 inclusive and 2% for tax years 2011-12 onwards)

Step 3

Add together so much of the person’s earnings from each employed earner’s employment as exceeded the Primary Threshold but did not exceed the Upper Earnings Limit.

Step 4

Deduct from the total found at step 3 the amount found at step 1.

Step 5

If the figure produced at step 4 is a positive figure multiply that figure by the additional primary percentage (1% for tax years 2003-04 to 2010-11 inclusive and 12% for tax years 2011-12 onwards).

If the figure produced by step 4 is a negative figure, it is treated for the purposes of step 8 as nil

Step 6

Add together so much of the person’s earnings from each employed earner’semployment as exceeded the Upper Earnings Limit.

Step 7

Multiply the result of step 6 by the additional primary percentage (1% or 2%, depending on the tax year)

Step 8

Add together the results of steps 2, 5 and 7.

The result of step 8 is the maximum amount of Class 1 or Class 1 and 2 contributions that an earner can pay in respect of the tax year.

The exception to this is where the earner is either in:

  • contracted-out employment, see [## Regulation 21(3), SS(C)R 2001

[## Regulation 21(3), SS(C)R 2001

](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim01160)

explains that from 6 April 2003 each contributor who, in the relevant tax year, was employed in more than one employment will have an individualised maximum liability for either Class 1 contributions or Class 1 and Class 2 contributions.

To determine a person’s maximum contribution liability for a tax year from 2003/2004 onwards,the following calculation is used:

Step 1

Deduct the relevant weekly Primary Threshold from the relevant weekly Upper Earnings Limit and multiply that figure by 53.

(Here ‘relevant’ means the Primary Threshold and Upper Earnings Limit in forceduring the year for which the maximum is being calculated.)

Step 2

Multiply the result of step 1 by the main primary percentage (11% for tax years 2003-04 to 2010-11 inclusive and 2% for tax years 2011-12 onwards)

Step 3

Add together so much of the person’s earnings from each employed earner’s employment as exceeded the Primary Threshold but did not exceed the Upper Earnings Limit.

Step 4

Deduct from the total found at step 3 the amount found at step 1.

Step 5

If the figure produced at step 4 is a positive figure multiply that figure by the additional primary percentage (1% for tax years 2003-04 to 2010-11 inclusive and 12% for tax years 2011-12 onwards).

If the figure produced by step 4 is a negative figure, it is treated for the purposes of step 8 as nil

Step 6

Add together so much of the person’s earnings from each employed earner’semployment as exceeded the Upper Earnings Limit.

Step 7

Multiply the result of step 6 by the additional primary percentage (1% or 2%, depending on the tax year)

Step 8

Add together the results of steps 2, 5 and 7.

The result of step 8 is the maximum amount of Class 1 or Class 1 and 2 contributions that an earner can pay in respect of the tax year.

The exception to this is where the earner is either in:

  • contracted-out employment, see](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim01164) or
  • a married woman/widow paying reduced rate NICs, see](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim01165)

Examples of the maximum calculations can be found at [## Regulation 21(3), SS(C)R 2001

[## Regulation 21(3), SS(C)R 2001

](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim01160)

explains that from 6 April 2003 each contributor who, in the relevant tax year, was employed in more than one employment will have an individualised maximum liability for either Class 1 contributions or Class 1 and Class 2 contributions.

To determine a person’s maximum contribution liability for a tax year from 2003/2004 onwards,the following calculation is used:

Step 1

Deduct the relevant weekly Primary Threshold from the relevant weekly Upper Earnings Limit and multiply that figure by 53.

(Here ‘relevant’ means the Primary Threshold and Upper Earnings Limit in forceduring the year for which the maximum is being calculated.)

Step 2

Multiply the result of step 1 by the main primary percentage (11% for tax years 2003-04 to 2010-11 inclusive and 2% for tax years 2011-12 onwards)

Step 3

Add together so much of the person’s earnings from each employed earner’s employment as exceeded the Primary Threshold but did not exceed the Upper Earnings Limit.

Step 4

Deduct from the total found at step 3 the amount found at step 1.

Step 5

If the figure produced at step 4 is a positive figure multiply that figure by the additional primary percentage (1% for tax years 2003-04 to 2010-11 inclusive and 12% for tax years 2011-12 onwards).

If the figure produced by step 4 is a negative figure, it is treated for the purposes of step 8 as nil

Step 6

Add together so much of the person’s earnings from each employed earner’semployment as exceeded the Upper Earnings Limit.

Step 7

Multiply the result of step 6 by the additional primary percentage (1% or 2%, depending on the tax year)

Step 8

Add together the results of steps 2, 5 and 7.

The result of step 8 is the maximum amount of Class 1 or Class 1 and 2 contributions that an earner can pay in respect of the tax year.

The exception to this is where the earner is either in:

  • contracted-out employment, see [## Regulation 21(3), SS(C)R 2001

[## Regulation 21(3), SS(C)R 2001

](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim01160)

explains that from 6 April 2003 each contributor who, in the relevant tax year, was employed in more than one employment will have an individualised maximum liability for either Class 1 contributions or Class 1 and Class 2 contributions.

To determine a person’s maximum contribution liability for a tax year from 2003/2004 onwards,the following calculation is used:

Step 1

Deduct the relevant weekly Primary Threshold from the relevant weekly Upper Earnings Limit and multiply that figure by 53.

(Here ‘relevant’ means the Primary Threshold and Upper Earnings Limit in forceduring the year for which the maximum is being calculated.)

Step 2

Multiply the result of step 1 by the main primary percentage (11% for tax years 2003-04 to 2010-11 inclusive and 2% for tax years 2011-12 onwards)

Step 3

Add together so much of the person’s earnings from each employed earner’s employment as exceeded the Primary Threshold but did not exceed the Upper Earnings Limit.

Step 4

Deduct from the total found at step 3 the amount found at step 1.

Step 5

If the figure produced at step 4 is a positive figure multiply that figure by the additional primary percentage (1% for tax years 2003-04 to 2010-11 inclusive and 12% for tax years 2011-12 onwards).

If the figure produced by step 4 is a negative figure, it is treated for the purposes of step 8 as nil

Step 6

Add together so much of the person’s earnings from each employed earner’semployment as exceeded the Upper Earnings Limit.

Step 7

Multiply the result of step 6 by the additional primary percentage (1% or 2%, depending on the tax year)

Step 8

Add together the results of steps 2, 5 and 7.

The result of step 8 is the maximum amount of Class 1 or Class 1 and 2 contributions that an earner can pay in respect of the tax year.

The exception to this is where the earner is either in:

  • contracted-out employment, see](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim01164) or
  • a married woman/widow paying reduced rate NICs, see [## Regulation 21(3), SS(C)R 2001

[## Regulation 21(3), SS(C)R 2001

](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim01160)

explains that from 6 April 2003 each contributor who, in the relevant tax year, was employed in more than one employment will have an individualised maximum liability for either Class 1 contributions or Class 1 and Class 2 contributions.

To determine a person’s maximum contribution liability for a tax year from 2003/2004 onwards,the following calculation is used:

Step 1

Deduct the relevant weekly Primary Threshold from the relevant weekly Upper Earnings Limit and multiply that figure by 53.

(Here ‘relevant’ means the Primary Threshold and Upper Earnings Limit in forceduring the year for which the maximum is being calculated.)

Step 2

Multiply the result of step 1 by the main primary percentage (11% for tax years 2003-04 to 2010-11 inclusive and 2% for tax years 2011-12 onwards)

Step 3

Add together so much of the person’s earnings from each employed earner’s employment as exceeded the Primary Threshold but did not exceed the Upper Earnings Limit.

Step 4

Deduct from the total found at step 3 the amount found at step 1.

Step 5

If the figure produced at step 4 is a positive figure multiply that figure by the additional primary percentage (1% for tax years 2003-04 to 2010-11 inclusive and 12% for tax years 2011-12 onwards).

If the figure produced by step 4 is a negative figure, it is treated for the purposes of step 8 as nil

Step 6

Add together so much of the person’s earnings from each employed earner’semployment as exceeded the Upper Earnings Limit.

Step 7

Multiply the result of step 6 by the additional primary percentage (1% or 2%, depending on the tax year)

Step 8

Add together the results of steps 2, 5 and 7.

The result of step 8 is the maximum amount of Class 1 or Class 1 and 2 contributions that an earner can pay in respect of the tax year.

The exception to this is where the earner is either in:

  • contracted-out employment, see [## Regulation 21(3), SS(C)R 2001

[## Regulation 21(3), SS(C)R 2001

](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim01160)

explains that from 6 April 2003 each contributor who, in the relevant tax year, was employed in more than one employment will have an individualised maximum liability for either Class 1 contributions or Class 1 and Class 2 contributions.

To determine a person’s maximum contribution liability for a tax year from 2003/2004 onwards,the following calculation is used:

Step 1

Deduct the relevant weekly Primary Threshold from the relevant weekly Upper Earnings Limit and multiply that figure by 53.

(Here ‘relevant’ means the Primary Threshold and Upper Earnings Limit in forceduring the year for which the maximum is being calculated.)

Step 2

Multiply the result of step 1 by the main primary percentage (11% for tax years 2003-04 to 2010-11 inclusive and 2% for tax years 2011-12 onwards)

Step 3

Add together so much of the person’s earnings from each employed earner’s employment as exceeded the Primary Threshold but did not exceed the Upper Earnings Limit.

Step 4

Deduct from the total found at step 3 the amount found at step 1.

Step 5

If the figure produced at step 4 is a positive figure multiply that figure by the additional primary percentage (1% for tax years 2003-04 to 2010-11 inclusive and 12% for tax years 2011-12 onwards).

If the figure produced by step 4 is a negative figure, it is treated for the purposes of step 8 as nil

Step 6

Add together so much of the person’s earnings from each employed earner’semployment as exceeded the Upper Earnings Limit.

Step 7

Multiply the result of step 6 by the additional primary percentage (1% or 2%, depending on the tax year)

Step 8

Add together the results of steps 2, 5 and 7.

The result of step 8 is the maximum amount of Class 1 or Class 1 and 2 contributions that an earner can pay in respect of the tax year.

The exception to this is where the earner is either in:

  • contracted-out employment, see](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim01164) or
  • a married woman/widow paying reduced rate NICs, see](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim01165)

Examples of the maximum calculations can be found at](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim01171) onwards.