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

HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
Updated
, see all updates

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 - contracted-out

Mr R Richards is an employee in contracted-out employment with earnings of £3,000 per month. He is employed for the whole of the 2012/2013 tax year and in March 2013 receives his annual bonus of £12000.

From April to February 2013 the following primary Class 1 NICs will be due:

Earnings on which the main primary percentage is payable:

£3000 (monthly earnings) less £634 (monthly PT) = £2366

£2366 x 12% (main primary percentage) = £283.92

less NIC rebate

£3000 (Monthly earnings) less £464 (Lower Earnings Limit) = £2536

£2536 x 1.4% (NIC rebate) = £35.50

Total primary payable from April to February = £2732.62 ((283.92 - 35.50) x 11)

In March the following primary 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 on which the additional primary percentage is payable:

£15,000 (total earnings) less £3540 (monthly UEL) = £11460

£11460 x 2% (additional primary percentage) = £229.20

Earnings on which the NIC rebate is due:

£3337 (upper accrual point) less £464 (monthly LEL) = £2873

£2873 x 1.4% (NIC rebate) = £40.22

Total primary payable for March = £537.70 (that is £348.72 + £229.20 - 40.22)

Total primary payable for 2012/2013 = £3270.32 (that is £2732.62 + £537.70)

For the 2012/2013, Mr Richards will have paid:

  • main primary NICs amounting to £3471.84 (that is, £3123.12 + £348.72)
  • less NIC rebate amounting to £430.72
  • additional primary NICs amounting to £229.20

See NIM01221 for general information relating to this example.