This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

National Insurance Manual

Class 1 structural overview from 6 April 2009: assessing primary Class 1 NICs from 6 April 2009.

Guidance on:

  • the Primary (and Secondary) Threshold is provided at NIM01204 
  • the Upper Accrual Point is provided at NIM01205 
  • the Upper Earnings Limit is provided at NIM01009 
  • earnings periods is provided at NIM01206 
  • secondary NICs is provided at NIM01230 

The amount of Class 1 NICs due from 6 April 2009 remains to be calculated in the earnings period in which the earnings are paid. The amount due is the aggregate of the:

  • main primary percentage on so much of the earnings as exceeds the Primary Threshold but does not exceed the Upper Earnings Limit and
  • additional primary percentage on all of the earnings above the Upper Earnings Limit.
  • For an earner who is contracted out the above applies but they are entitled to a NIC rebate. The amount of NIC rebate is due on
  • So much of the earnings as exceeds the Lower Earnings Limit but does not exceed the Upper Accrual Point

The additional primary percentage is payable only where the earnings in the relevant earnings period exceed the Upper Earnings Limit. This means that it is possible for a primary contributor to pay additional primary NICs even though they may not earn in excess of 52 (or 53) times the Upper Earnings Limit in any one tax year.

From April 2011 the

  • main primary percentage increased to 12%
  • additional primary percentage increased to 2%

There is no limit on the amount of additional primary Class 1 NICs payable. The amount of this uncapped liability is determined by the amount of earnings in excess of the Upper Earnings Limit paid in the relevant earnings period. The greater the earnings, the greater the amount of additional primary contributions that will be due.

For examples of the calculation see NIM01220.