Class 1 Structural Overview - post April 2003: Structural changes: The Class 1 and 2 maximum: Examples: Two Class 1 employment and self-employment: No Class 2 due
F Fox is both employed and self-employed. His total earnings for the 2003/2004 from hisClass 1 employments are £48,000. He is paid £2000 per month in each employment. Hismaximum Class 1and 2 liability is calculated as follows:
Deduct the relevant Primary threshold from the relevant UEL and multiply that figure by53.
595 - 89 = 506 x 53 = 26818
Multiply the result of step 1 by 11%
26818 x 11% = 2949.98
Add together so much of the persons earnings from each employed earnersemployment as exceeded the Primary Threshold but did not exceed the Upper Earnings Limit.
2000 (monthly UEL) - 385 (monthly PT) = 1615 x 24 = 38760
Deduct from the total found at step 3 the amount produced by step 1
38760 - 26818 = 11942
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
11942 x 1% = £119.42
Add together so much of the persons earnings from each employment as exceeded theUpper Earnings Limit.
There are no earnings above the Upper Earnings Limit
Multiply the result of step 6 by 1%
Add together the results of steps 2, 5 and 7.
£2949.98 + 119.42 + Nil = £3069.40
F Foxs maximum for the 2003/2004 tax year is £3069.40
Since Mr Fox will have met his maximum by payment of Class 1 NICs, no payment of Class 2NICs is required. This is because his earnings between the PT and the UEL exceed £26818and he will have pay Class 1 NICs at the main primary percentage of 11% on earningsequivalent to 53 x the UEL less the PT, plus the required additional 1%.