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HMRC internal manual

# Class 1 Structural Overview - post April 2003: Structural changes: the Class 1 and 2 maximum: Examples: Director with three directorships

## Example 7

J Jones is a director of three companies. He receives no regular earnings from any ofhis companies but receives an annual bonus of £100,000 in each. His maximum Class 1liability 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.

30940 (annual UEL) - 4615 (annual PT) = 26325 x 3 = 78975

### Step 4

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

78975 - 26818 = 52157

### 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

52157 x 1% = 521.57

### Step 6

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

100,000 - 30940 = 69060 x 3 = 207180

### Step 7

Multiply the result of step 6 by 1%

207180 x 1% = 2071.80

### Step 8

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

2949.98 + 521.57 + 2071.80 = 5543.35

J Jones maximum for the 2003/2004 tax year is £5543.35.