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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 - post April 2003: Structural changes: The Class 1 and 2 maximum: Examples: Three Class 1 employments: Fluctuating earnings

Example 3

E Evans has three separate employments. His total earnings for the 2003/2004 tax yearare £72,000. He is paid monthly in each job. In each employment he receives fluctuatingearnings.

His earnings are as follows:

  Job 1     Job 2     Job 3    
                   
Earnings Total PT to UEL Over UEL Total PT to UEL Over UEL Total PT to UEL Over UEL
April 03 300 - - 2500 2115 - - - -
May 03 600 215 - 6000 2194 3421 - - -
June 03 320 - - 2500 2115 - - - -
July 03 850 465 - 2500 2115 - - - -
Aug 03 750 365 - 6000 2194 3421 - - -
Sept 03 430 45 - 2500 2115 - 3000 2194 421
Oct 03 700 315 - 2500 2115 - 2000 1615 -
Nov 03 1000 615 - 6000 2194 3421 3200 2194 621
Dec 03 800 415 - 2500 2115 - 2500 2115 -
Jan 03 1200 815 - 2500 2115 - 2600 2194 21
Feb 03 1400 1015 - 6000 2194 3421 3000 2194 421
Mar 03 350 - - 2500 2115 - 3000 2194 421
Total 8700 4265 - 44000 25696 13684 19300 14700 1905
Aggregate £72,000                

To establish the earnings on which the maximum is based it is necessary to establishthe:

  • aggregate amount of earnings from each job which are between the Primary Threshold and the Upper Earnings Limit and
  • aggregate amount of earnings from each job above the Upper Earnings Limit
Total aggregate earnings Aggregate earnings between PT and UEL Aggregate earnings over UEL
     
£72,000 £44661 (4265 + 25696 + 14700) £15589 (nil + 13684 + 1905)

Step 1

Deduct the relevant Primary Threshold from the relevant Upper Earnings Limit andmultiply that figure by 53.

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.

4265 (job 1) + 25696 (job 2) + 14700 (job 3) = 44661

Step 4

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

44661 - 26818 = 17843

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 thepurposes of step 8 as nil

17843 x 1% = 178.43

Step 6

Add together so much of the person’s earnings from each employment as exceeded theUpper Earnings Limit.

Nil (job 1) + 13684 (job 2) + 1905 (job 3) = 15589

Step 7

Multiply the result of step 6 by 1%

15589 x 1% = £155.89

Step 8

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

£2949.98 + 178.43 + 155.89 = 3284.30

E Evans’s maximum for the 2003/2004 tax year is £3284.30.