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HMRC internal manual

National Insurance Manual

Earnings Periods: Employee starts work part way through an earnings period but is not paid until the end of the next earnings period: Earnings periods in different tax years

Regulations 3(1)(a) & 7(3), SS(C)R 2001

The principle outlined in NIM08310 applies. For example, ifan employee starts work in March but does not receive their first payment of earningsuntil April (covering the March and April earnings periods), work out NICs on the earningsfor each period separately. However, because Regulation 7(3) does not allow us to treatearnings paid in one tax year as paid in another, NICs must be calculated on the paymentdue for March using the later year’s contribution rates and limits.


  • an employee starts work on 22 March 2001
  • the employee has a monthly earnings period (earnings are paid on the last day of each calendar month)
  • the employment is not contracted-out
  • it is too late for the employer to put the employee on to the payroll for March so the employee receives their first earnings payment, for the period 22 March to 30 April, on 30 April 2001.

The employee’s gross pay is £1,900 which represents:

  • £400 for the period 22 to 31 March
  • £1500 for the period 1 to 30 April

NICs are calculated on each sum separately as follows (2001/02 tax year):

  • monthly LEL = £312
  • monthly ET = £378
  • monthly UEL = £2,492

Earnings payment for March = £400

  • Employee NICs = £22 x 10% = £2.20
  • Employer NICs = £22 x 11.9% = £2.62
  • Total NICs = £4.82

Earnings payment for April = £1,500

  • Employee NICs = £1,122 x 10% = £112.20
  • Employer NICs = £1,122 x 11.9% = £133.52
  • Total NICs = £245.72

Both sets of NICs are recorded on the employee’s record for the 2001/02 tax year.

This principle also applies to weekly paid employees.


See also NIM09800 regarding re-allocation of contributions forbenefit purposes.