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HMRC internal manual

National Insurance Manual

Class 1 structural overview - post April 2009: structural changes: the Class 1 and 2 annual maximum: examples: general

NIM01272 to NIM01278 provide examples of calculating the Class 1 and 2 annual maximum for various earners with differing employment patterns. The examples are for illustrative purposes only as each contributor with more than one employment will have an individual maximum based on the number of employments held and the level of earnings received in their Class 1 employments. The following notes should be read in conjunction with each example:

Example 1: Two Class 1 employments - earnings of £97,200

NIM01272 provides a straightforward example of a monthly paid employee with two separate employments who is employed throughout the 2011/2012 tax year. The total earnings are £97,200. The employee is subject to a maximum that equals 12% of earnings equivalent to 53 x the UEL less the PT, plus 2% on all remaining earnings which, when paid were above the monthly Primary Threshold. The employee has earnings which are consistently above the monthly UEL.

Example 2: Three Class 1 employments - earnings of £97,200 (static earnings)

NIM01273 provides the same earnings as in NIM01272 but spread evenly over three employments. Again the employee is employed throughout the whole of the 2011/2012 tax year and is paid monthly in each employment. The employee is subject to a maximum that equals 12% of earnings equivalent to 53 x the UEL less the PT, plus 2% on all remaining earnings which, when paid were above the monthly Primary Threshold. The employee has no earnings above the monthly UEL.

Example 3: Three Class 1 employments - earnings of £97,200 (fluctuating earnings)

NIM01274 provides the same earnings as in NIM01272 spread over three employments but which fluctuate. The employee also commences one employment during the 2011/2012 tax year. The employee is subject to a maximum that requires 12% on earnings equivalent to 53 x the UEL less the PT, plus 2% on all remaining earnings which, when paid were above the monthly Primary Threshold. In some earnings periods the employee earns below the PT and in others above the UEL.

Example 4: Two Class 1 employments and also self-employment - Class 1 earnings above the UEL. Employee not required to pay Class 2

NIM01275 provides a straightforward example of a monthly paid employee with two employed earner’s employment who is also self-employed. The employee earns £72,000 evenly throughout the 2011/2012 tax year. The employee is subject to a maximum that requires 12% on earnings equivalent to 53 x the UEL less the PT, plus 2% on all remaining earnings which, when paid were above the monthly Primary Threshold. The employee reaches his maximum by the payment of Class 1 contributions and no Class 2 contributions are due

Example 5: One Class 1 employment and also self-employment - Class 1 earnings above the UEL. Employee required to pay Class 2

NIM01276 provides an example of a monthly paid employee with one Class 1 employment who is also self-employed and who earns the same as the employee in NIM01275. The employee is subject to a maximum that requires 12% on earnings equivalent to 53 x the UEL - less the PT, plus 2% on all remaining earnings which, when paid were above the monthly Primary Threshold. The employee does not exceed his maximum by the payment of Class 1 NICs and is therefore required to pay Class 2 NICs.

Example 6: Four Class 1 employments - maximum not reached

NIM01277 provides an example of a maximum calculation involving a person who has earnings from four employments. The employee earns £180 a week in each employment. The employee is subject to a maximum that requires 12% on earnings equivalent to 53 x the UEL only.

Example 7: Director with three directorships

NIM01278 provides an example of a maximum calculation for a director who has 3 directorships. In each he receives no regular payments but in each he receives an annual bonus of £200,000. The director is subject to a maximum that requires 12% on earnings equivalent to 53 x the UEL less the PT, plus 2% on all remaining earnings which, when paid were above the Primary Threshold.