NIM01278 | Class 1 structural overview - from April 2009: structural changes: the Class 1 and 2 maximum: examples: director with three directorships

Example 7

C Kent is a director of three companies. He receives no regular earnings from any of his companies but receives an annual bonus of £200,000 in each. His maximum Class 1 liability for the 2021 to 2022 tax year 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.

50,270 (annual UEL) - 9,568 (annual PT) = 40,702 x 3 = 122,106

Step 4

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

122,106 - 41,499 = 80,607

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

80,607 x 2% = 1,612.14

Step 6

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

200,000 - 50,270 = 149,730 x 3 = 449,190

Step 7

Multiply the result of step 6 by 2%

449,190 x 2% = 8,983.80

Step 8

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

4,979.88 + 1,612.14 + 8,983.80 = 15,575.82

C Kent maximum for the 2021 to 2022 tax year is £15,575.82.