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HMRC internal manual

National Insurance Manual

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HM Revenue & Customs
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Class 1: Calculating Class1 NICs for Directors: Annual earnings period: Examples

Regulation 8 SSCR 2001

The examples are to illustrate the principle of applying an annual earnings period. NIM12028 – NIM12030 relate to 1999/2000 and NIM12031 – NIM12034 relate to 2000/2001 tax year.

The 1999/2000 rates and limits used are:

* Weekly/Annual LEL £66/£3432
   
* Weekly/Annual UEL £500/£26000
* Weekly/Annual Secondary Threshold (‘EET’) £83/£4335
* Primary/Secondary % 10%/12.2%

The 2000/2001 rates and limits used are:

Weekly/Annual LEL £67/£3484
   
Weekly/Annual UEL £535/£27820
Weekly/ Annual Primary Threshold £76/£3952
Weekly/Annual Secondary Threshold £83/£4385
Primary/Secondary % 10%/12.2%

Unless otherwise stated, the director has been in post at the beginning of the year.For ease of presentation only, the NICs shown in the examples have been rounded down.

These examples are for tax years prior to 6 4 2003. From 6 4 2003, a new primary liabilitywas introduced on all earnings above the Upper Earnings Limit. This should be taken intoaccount when applying the examples to tax years 2003/2004 onwards. Full guidance on thenew primary liability on earnings above the Upper Earnings Limit is provided at NIM01100.