NIM12024 | Class 1: Calculating Class 1 NICs for Directors: Annual earnings periods: Directorship ceases and employment starts

Regulation 8(3) of the Social Security (Contributions) Regulations 2001 (SSCR 2001) (SI 2001 No 1004)

If a company pays earnings to a former director in respect of the directorship and those earnings are paid in the same tax year as the one in which the directorship ends, those earnings must be added to the earnings received as a director and NICs calculated using the director’s earnings period.

If the director becomes an employee of the same company, the NICs due on earnings received as an employee must also be calculated using the director’s earnings period.

If the former director continues to receive earnings as an employee the earnings period changes to the appropriate one for the new employment at the beginning of the next tax year.