NIM01118 | Class 1 Structural Overview from 6 April 2003: Assessing primary Class 1 NICs from April 2003: Example: Earnings are occasionally above the Upper Earnings Limit

Mr B Brown is an employee in a non contracted-out employment with earnings of £2,000 per month. He is employed for the whole of the 2003 to 2004 tax year and in March 2004 receives his annual bonus of £12,000.

Earnings on which the main primary percentage is payable:

• £2,000 (monthly earnings) less £385 (monthly PT) = £1,615

• £1,615 x 11% (main primary percentage) = £177.65

• Total primary payable from April to February = £1,954.15

In March the following primary NICs will be due:

Earnings on which the main primary percentage is payable:

• £2,579 (monthly UEL) less £385 (monthly PT) = £2,194

• £2,194 x 11% (main primary percentage) = £241.34

Earnings on which the additional primary percentage is payable:

• £14,000 (total earnings) less £2,579 (monthly UEL) = £11,421

• £11,421 x 1% (additional primary percentage) = £114.21

Total primary payable for March = £355.55 (that is £241.34 + £114.21)

Total primary payable for 2003 to 2004 = £2,309.70 (that is £1,954.15 + £355.55)

For the 2003 to 2004, Mr Brown will have paid:

• main primary NICs amounting to £2,195.49 (that is £1,954.15 + £241.34)

• additional primary NICs amounting of £114.21

See NIM01116 for general information relating to this example.