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HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
Updated
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Class 1 Structural Overview - post April 2003: Structural changes: The Class 1 and 2 maximum: Examples: Two Class 1 employments

Example 1

C Cook has two separate employments. His total earnings for the 2003/2004 tax year are£72,000. He is paid monthly in each job and receives the same amount of earnings in eachearnings period. His maximum Class 1 liability is calculated as follows:

Step 1

Deduct the relevant Primary threshold from the relevant UEL and multiply that figure by53.

595 - 89 = 506 x 53 = 26818

Step 2

Multiply the result of step 1 by 11%

26818 x 11% = 2949.98

Step 3

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

2579 (monthly UEL) - 385 (monthly PT) = 2194 x 24 = 52656

Step 4

Deduct from the total found at step 3 step the amount produced by step 1

52656 - 26818 = 25838

Step 5

If the figure produced at step 4 is a positive figure multiply that figure by 1%

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

25838 x 1% = 258.38

Step 6

Add together so much of the person’s earnings from each employment asexceeded the Upper Earnings Limit.

3000 (monthly earnings) - 2579 (Monthly UEL) = 421 x 24 = 10104

Step 7

Multiply the result of step 6 by 1%

10104 x 1% = 101.04

Step 8

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

£2949.98 + 258.38 + 101.04 = £3309.40

C Cook’s maximum for the 2003/2004 tax year is £3309.40.