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HMRC internal manual

National Insurance Manual

Class 1: Calculating Class 1 NICs for Directors: Examples: Regular monthly salary

Regulation 8 SSCR 2001

Director paid £3000 on 28th of each month starting April 2000. Cumulative NICs areshown but amount actually payable each month is difference between amount due and amountpreviously paid. The NICs amounts are also rounded down for ease of presentation.

Date £ Cumulative £ Primary £ Secondary Notes
         
28 April £3000 Nil Nil Below Earnings Thresholds
28 May £6000 £204 (6000 – 3592 @ 10%) £197 (6000 - 4385 @ 12.2%) Earnings exceed both primary & secondary thresholds
28 June £9000 £504 £563 Calculations as before
July to December £12000 - £27000 £2340 £2759 Calculations as before
28 January £30000 £2386 (27820 – 3592 @ 10%) £3125 (30000 – 4385 @ 12.2%) Primary NICs restricted to earnings up to UEL*
No restriction on secondary        
28 February £33000 £2386 £3491 Secondary NICs calculation as before
28 March £36000 £2386 £3857 (36000 – 4385 @ 12.2%)  

If the employer decides to ‘pay on account’ (NIM12026)Class 1 NICs are due from the first month and the employer adjusts the final payment atthe end of the year to ensure the same amount of NICs is paid as in the example.

  • The above example is for a tax year prior to 6 4 2003. From 6 4 2003, a new primaryliability was introduced on all earnings above the Upper Earnings Limit. This should betaken into account when applying the example to tax years 2003/2004 onwards. Full guidanceon the new primary liability on earnings above the Upper Earnings Limit is provided at NIM01100.