NIM01224 - Class 1 structural overview from 6 April 2009: assessing primary Class 1 NICs from 6 April 2009: example: earnings are consistently above the Upper Earnings Limit - contracted-out
Mr Summers is an employee in a contracted-out employment with earnings of £4,000 per month. He is employed for the whole of the 2012 to 2013 tax year.
In April 2012 the following primary Class 1 NICs will be due:
Earnings on which the main primary percentage is payable:
£3540 (monthly UEL) less £634 (monthly PT) = £2906
£2906 x 12% (main primary percentage) = £348.72
Earnings which attract the NIC Rebate
£3337 (Monthly UAP) less £464 (Monthly LEL) = £2873
£2873 x 1.4% (NIC Rebate) = £40.22
Earnings on which the additional primary percentage is payable:
£4000 (total earnings) less £3540 (monthly UEL) = £460
£460 x 2% (additional primary percentage) = £9.20
Total primary payable for April 2012 = £317.70 (that is £348.72 + £9.20 - £40.22)
As Mr Summers remains employed for the whole of the 2012 to 2013 tax year with the same employer, the following primary Class 1 NICs will be due:
£317.70 x 12 monthly deductions = £3812.40
For the 2012 to 2013 tax year, Mr Summers will have paid:
- main primary NICs amounting to £4184.64
- additional primary NICs amounting to £110.40
- less a NIC rebate amounting to £482.64
See NIM01221 for general information relating to this example.