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HMRC internal manual

Statutory Payments Manual

HM Revenue & Customs
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Average Weekly Earnings (AWE) - SSP: employee paid annually (directors)

For the general rule on how to establish the relevant period, see SPM170200.

An employee may have an annual pay period for NICs if they:

  • are paid once a year
  • receive a significant proportion of their earnings as an annual bonus or comparatively large commission payments
  • are a director, or
  • are paid in the same way as a director.

Even if they receive an advance on their salary or directors’ drawings from a loan account throughout the year, the pay days when NICs liability arises are used to work out the relevant period and AWE.

For directors drawing in anticipation of a vote, this means that the drawings are not counted as any NICs paid on them is optional and liability only arises at the time of the vote.

To work out average weekly earnings for an employee or director paid annually or by formal vote

Note the first day of the PIW

  1. Find the date of the last vote before the first day the director is sick.
This is the last day of the relevant period
  1. Find the date of the vote before the date in 1 and come forward one day. This is the first day of the relevant period.
  2. Add together the money voted between the dates in 2 and 1 (inclusive)
(Do not include any money drawn in anticipation of the vote)
  1. Work out how many whole months there are between the dates 2 and 1 (inclusive) if there are not a whole number of months, see SPM170400 
  2. Divide the figure in 3 by the number of whole months in 4
  3. Multiply the figure in 5 by 12
  4. Divide the figure in 6 by 52 (Do not round up or down to whole pence)

Example to work out AWE for director paid by formal vote

First day of PIW - 15.05.2012

  1. 31.12.2011
  2. 31.12.2010 come forward one day is 01.01.2011 
  3. £60,150
  4. 12 months
  5. £60,250 divided by 12 = £5020.8333
  6. £5020.8333 multiplied by 12 = £60,249.999
  7. £60,249.999 divided by 52 = £1,158.6538