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HMRC internal manual

National Insurance Manual

Earnings periods: directions issued in accordance with regulation 31, SS(C)R 2001: examples

It is not possible to lay down precise and simple rules for applying regulation 31 because the circumstances in which it can be applied vary widely. The following examples illustrate the types of cases which could merit the issue of direction under regulation 31.

Example 1 - unequal payments

Employee Weekly wage Annual lump sum
Employee 1 £400 = £20800p.a. £18000
Employee 2 £300 = £15600 p.a. £18000 (regulation 3(2B) refers)
Employee 3 £145 = £7450 p.a. £7000

Only employee 2 satisfies the criteria for a direction under regulation 3(2B), see NIM09500, but assuming that that employee is paying standard rate contributions he or she will pay more on total earnings of £33,600 than employee 1 would pay on total earnings of £38,800. Employee 3 would only pay one week’s maximum (plus the additional primary rate of 2%) on total annual earnings of £14,540.

Providing a regulation 3(2B) notification has not already been issued in respect of employee 2, regulation 31 directions would be appropriate on all three employees.

Example 2 - irregular payments

An employee is paid a regular weekly wage of £138 but large additional payments at irregular intervals, eg, £2000 in May, £1000 in September, £600 in November and £1200 in January. This case would merit a direction under regulation 31.

Example 3 - unequal payments

A salesman receives a basic weekly wage of £350 per month but this is supplemented by regular monthly commission payments of varying amounts, viz: -

January £400 July £500
February £1000 August £600
March £1500 September £600
April £400 October £400
May £600 November £400
June £200 December £800

This case would merit a direction under regulation 31.