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HMRC internal manual

# 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.