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HMRC internal manual

# Class 1 structural overview - From April 2009: structural changes: the Class 1 and 2 maximum: examples: two Class 1 employments

## Example 1

R Drake has two separate employments. His total earnings for the 2011/2012 tax year are £97,200. He is paid monthly in each job and receives the same amount of earnings in each earnings period. His maximum Class 1 liability is calculated as follows:

Step 1

Deduct the relevant Primary threshold from the relevant UEL and multiply that figure by 53.

817 - 139 = 678 x 53 = 35934

Step 2

Multiply the result of step 1 by 12%

35934 x 12% = 4312.08

Step 3

Add together so much of the person’s earnings from each employed earner’s employment as exceeded the Primary Threshold but did not exceed the Upper Earnings Limit.

3540 (monthly UEL) - 602 (monthly PT) = 2938 x 12 x 2 = 70512

Step 4

Deduct from the total found at step 3 step the amount produced by step 1

70512 - 35934 = 34578

Step 5

If the figure produced at step 4 is a positive figure multiply that figure by 2%

If the figure produced at step 4 is a negative figure, it is treated for the purposes of step 8 as nil

34578 x 2% = 691.56

Step 6

Add together so much of the person’s earnings from each employment as exceeded the Upper Earnings Limit.

4050 (monthly earnings) - 3540 (Monthly UEL) = 510 x 24 = 12240

Step 7

Multiply the result of step 6 by 2%

12240 x 2% = 244.80

Step 8

Add together the results of steps 2, 5 and 7.

4312.08 + 691.56 + 244.80 = 5248.44

R Drake’s maximum for the 2011/2012 tax year is £5248.44.