NIM01223 - Class 1 structural overview from 6 April 2009: assessing primary Class 1 NICs from April 2009: example: earnings are occasionally above the Upper Earnings Limit - not contracted out

Mr Murdock is an employee with earnings of £3,000 per month. He is employed for the whole of the 2020-2021 tax year and in March 2021 receives his annual bonus of £24,000.

From April 2020 to February 2021 the following primary Class 1 NICs will be due:

Earnings on which the main primary percentage is payable:

£3000 (monthly earnings) less £792 (monthly PT) = £2208.00

2208.00 x 12% (main primary percentage) = £264.96

Total primary payable from April 2020 to February 2021 = £2914.56 (264.96 x 11)

In March 2021 the following primary NICs will be due:

Earnings on which the main primary percentage is payable:

£4167 (monthly UEL) less £792 (monthly PT) = £3375

£3375 x 12% (main primary percentage) = £405.00

Earnings on which the additional primary percentage is payable:

£27,000 (total earnings) less £4167 (monthly UEL) = £22,833

£22,833 x 2% (additional primary percentage) = £456.66

Total primary payable for March 2021 = £861.66 (that is £405.00 + £456.66)

Total primary payable for 2020-2021 = £3,776.32 (that is £2914.66 + £861.66)

For the 2020-2021 tax year, Mr Murdock will have paid:

  • main primary NICs amounting to £3419.66 (that is, £2914.66 + £405.00)
  • additional primary NICs amounting to £456.66

For general information relating to this example see NIM01221.