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HMRC internal manual

National Insurance Manual

Class 1 NICs: Expenses and allowances: Civic dignitaries' and Councillors’ allowances: Assessing Class 1 NICs

If there is a regular earnings pattern, as is usually the case, the earnings period is equal to the length of the pay interval. The earnings period for a person paid monthly is therefore one month; for someone paid bimonthly it is two months and where a person is paid annually it is one year.

People who receive earnings monthly, bimonthly or annually are liable to pay Class 1 NICs monthly, bimonthly or yearly, taking into account the corresponding earnings threshold.

If expenses are paid at different intervals, the earnings period for the assessment of Class 1 NICs is the shortest interval at which any payments are made. For example, if the agreement between the LA and the councillor or civic dignitary is that

  • travelling expenses are paid monthly
  • entertainment expenses are paid quarterly, and
  • clothing expenses are paid annually

then the earnings period will be monthly (because this is the shortest interval at which payments of earnings are made).

Class 1 NICs will be payable if the total payments of earnings in any month reach the monthly earnings threshold. See NIM01008.

See NIM08000 for further guidance about earnings periods.