NIM01224 - Class 1 structural overview from 6 April 2009: assessing primary Class 1 NICs from 6 April 2009: example: earnings are consistently above the Upper Earnings Limit - contracted-out

Mr Summers is an employee in a contracted-out employment with earnings of 拢4,000 per month. He is employed for the whole of the 2012 to 2013 tax year.

In April 2012 the following primary Class 1 NICs will be due:

Earnings on which the main primary percentage is payable:

拢3540 (monthly UEL) less 拢634 (monthly PT) = 拢2906

拢2906 x 12% (main primary percentage) = 拢348.72

Earnings which attract the NIC Rebate

拢3337 (Monthly UAP) less 拢464 (Monthly LEL) = 拢2873

拢2873 x 1.4% (NIC Rebate) = 拢40.22

Earnings on which the additional primary percentage is payable:

拢4000 (total earnings) less 拢3540 (monthly UEL) = 拢460

拢460 x 2% (additional primary percentage) = 拢9.20

Total primary payable for April 2012 = 拢317.70 (that is 拢348.72 + 拢9.20 - 拢40.22)

As Mr Summers remains employed for the whole of the 2012 to 2013 tax year with the same employer, the following primary Class 1 NICs will be due:

拢317.70 x 12 monthly deductions = 拢3812.40

For the 2012 to 2013 tax year, Mr Summers will have paid:

  • main primary NICs amounting to 拢4184.64
  • additional primary NICs amounting to 拢110.40
  • less a NIC rebate amounting to 拢482.64

See NIM01221 for general information relating to this example.