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HMRC internal manual

National Insurance Manual

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Class 1 structural overview - from April 2009: structural changes: the Class 1 and 2 maximum: examples: three Class 1 employments: fluctuating earnings

Example 3

S Rogers has three separate employments. His total earnings for the 2011/2012 tax year are £97,200. He is paid monthly in each job. In each employment he receives fluctuating earnings. His earnings are as follows:

  Job 1       Job 2       Job 3      
                         
Earnings Total PT to UAP UAP to UEL Over UEL Total PT to UAP UAP to UEL Over UEL Total PT to UAP UAP to UEL Over UEL
April 11 600 - - - 3300 2698     - - - -
May 11 850 248 - - 6000 2735 203 2460 - - - -
June 11 520 - - - 3300 2698     - - - -
July 11 1450 848 - - 3300 2698     - - - -
Aug 11 1250 648 - - 6000 2735 203 2460   - - -
Sept 11 650 48 - - 3300 2698     5500 2735 203 1960
Oct 11 1100 498 - - 3300 2698     2000 1398 - -
Nov 11 1400 798 - - 6000 2735 203 2460 6200 2735 203 2660
Dec 11 1800 1198 - - 3300 2698     2500 1998 - -
Jan 11 1600 998 - - 3300 2698     3300 2698 - -
Feb 11 2000 1398 - - 6000 2735 203 2460 6000 2735 203 2460
Mar 11 580 - - - 3300 2698     7500 2735 203 3960
Total 13800 6682     50400 32524 812 9840 33000 16934 812 11040
Aggregate £97200                      

To establish the earnings on which the maximum is based it is necessary to establish the aggregate amount of:

  • earnings from each job which are between the Primary Threshold and the Upper Accrual Point and
  • earnings from each job which are between the Upper Accrual Point and the Upper Earnings Limit and
  • earnings from each job above the Upper Earnings Limit
Total aggregate earnings Aggregate earnings between PT and UAP Aggregate earnings between UAP and UEL Aggregate earnings over UEL
       
£97200 6682 + 32524 + 16934 = £56140 812 + 812 = £1624 nil + 9840 + 11040 = £20880

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.

6682 (job 1) + 33336 (job 2) + 17746 (job 3) = 57764

Step 4

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

57764 - 35934 = 21830

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

21830 x 2% = 436.60

Step 6

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

Nil (job 1) + 9840 (job 2) + 11040 (job 3) = 20880

Step 7

Multiply the result of step 6 by 2%

120880 x 2% = 417.60

Step 8

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

4312.08 + 436.60 + 417.60 = 5166.28

S Rogers’ maximum for the 2011/2012 tax year is £5166.28