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HMRC internal manual

National Insurance Manual

Aggregation of earnings: examples: contracted-out and not contracted-out: no Appropriate Personal Pension (APP) held: contracted-out earnings exceed UEL

This example uses 2015 to 2016 rates and earnings bands. NICs are worked out using the exact percentage method and are based on the employee being a member of a Contracted-Out Salary Related (COSR) scheme.

When calculating NICs where no APP is held, priority is given to the contracted-out earnings. NICs are worked out on the total earnings using the shortest earnings period of the contracted-out employment(s).


S. Davies has 2 jobs with the same employer. He earns £5,000 per month from his contracted-out job and £1,200 per month from his not-contracted-out job. The total earnings are £6,200 per month and the earnings period is monthly.

Employee’s NICs are worked out at the:

  • main percentage rate on any earnings above the PT up to and including the UEL (less the employee’s contracted-out rebate on earnings between LEL and UAP)
  • additional primary percentage on earnings above the UEL

Employer’s NICs are worked out at the:

  • main secondary percentage rate on earnings above the ST as far as the earnings from the contracted-out employment go (less the employer’s contracted-out rebate on earnings which exceed the LEL)
  • main secondary percentage on earnings from the not contracted out employment
NICs type NICs due Table letter
Employee’s NICs £355.85 D
Employer’s NICs £608.98 D

Recording the NICs due on Real Time Information

Payroll software will record the category letter where NICs are paid on earnings between the LEL and the UEL. Figures will be recorded under contribution Table letter D. The entries on RTI for month 1 of 2015 to 2016 will be as follows.

Month 1
Data item Description  
79 NI category D
79A Gross earnings for NICs year to date £6,200
79B Gross earnings for NICs pay period £6,200
82 Earnings at the LEL year to date £486
82A Earnings at LEL to PT year to date £186
83 Earnings PT to UAP year to date £2,665
84 Earnings UAP to UEL year to date £187
86A Employer NICs year to date £608.98
86Aa Employer NICs this pay period £608.98
86B Employee NICs year to date £355.85
86Ba Employee NICs this period £355.85
49 Aggregated earnings indicator Yes