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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 employment and self-employment: no Class 2 due

## Example 4

A Stark is both employed and self-employed. Her total earnings for the 2011/2012 from her Class 1 employments are £72,000. She is paid £3000 per month in each employment. Her maximum Class 1 and 2 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.

3000 (monthly earnings) - 602 (monthly PT) = 2398 x 24 = 57552

Step 4

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

57552 - 35934 = 21618

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

21618 x 2% = 432.36

Step 6

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

There are no earnings above the Upper Earnings Limit

Step 7

Multiply the result of step 6 by 2%

Nil

Step 8

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

4312.08 + 432.36 + Nil = 4744.44

A Stark’s maximum for the 2011/2012 tax year is £4744.44

Since Ms Stark will have met her maximum by payment of Class 1 NICs, no payment of Class 2 NICs is required. This is because her earnings between the PT and the UEL exceed £35934 and she will have paid Class 1 NICs at the main primary percentage of 12% on earnings equivalent to 53 x the UEL less the PT, plus the required additional 2%.