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HMRC internal manual

National Insurance Manual

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Class 1 structural overview from 6 April 2009: structural changes: the Class 1 and 2 annual maximum: employees in contracted-out employment

Regulation 21(3), SS(C)R 2001

NIM01251 explains the calculation of the Class 1 and 2 annual maximum for employees who have more than one employment.

The calculation provides an annual maximum for all earners who have more than one employment but it does not take account of those employees who, because they are in contracted-out employment, will pay primary contributions at a reduced main rate.

To ensure that these contributors are catered for, regulation 21(3) provides that for the purposes of determining an earner’s liability under the maximum calculation, a person who pays an amount of primary Class 1 NICs at a rate of less than 12% because they are in contracted-out employment shall be treated as having paid contributions at 12%.