NIM01275 | Class 1 structural overview - from April 2009: structural changes: the Class 1 and 2 maximum: examples: two Class 1 employment and self-employment: no Class 2 due

Example 4

A Stark is both employed and self-employed. Her total earnings for the 2021 to 2022 from her Class 1 employments are £72,000. She is paid £3000 per month in each employment. Her maximum Class 1 and 2 liability is calculated as follows:

Step 1

Deduct the relevant Primary threshold from the relevant UEL and multiply that figure by 53.

967 - 184 = 783 x 53 = 41,499

Step 2

Multiply the result of step 1 by 12%

41,499 x 12% = 4,979.88

Step 3

Add together so much of the person’s earnings from each employed earner’s employment as exceeded the Primary Threshold but did not exceed the Upper Earnings Limit.

3000 (monthly earnings) - 797 (monthly PT) = 2,203 x 24 = 52,872

Step 4

Deduct from the total found at step 3 the amount produced by step 1

52,872 - 41,499 = 11,373

Step 5

If the figure produced at step 4 is a positive figure multiply that figure by 2%

If the figure produced at step 4 is a negative figure, it is treated for the purposes of step 8 as nil

11,373 x 2% = 227.46

Step 6

Add together so much of the person’s earnings from each employment as exceeded the Upper Earnings Limit.

There are no earnings above the Upper Earnings Limit

Step 7

Multiply the result of step 6 by 2%

Nil

Step 8

Add together the results of steps 2, 5 and 7.

4979.88 + 227.46 + Nil = 5207.34

A Stark’s maximum for the 2021 to 2022 tax year is £5207.34

Since Ms Stark will have met her maximum by payment of Class 1 NICs, no payment of Class 2 NICs is required. This is because her earnings between the PT and the UEL exceed £41,499 and she will have paid Class 1 NICs at the main primary percentage of 12% on earnings equivalent to 53 x the UEL less the PT, plus the required additional 2%.