NIM01160 explains that from 6 April 2003 each contributor who,
in the relevant tax year, was employed in more than one employment
will have an individualised maximum liability for either Class 1
contributions or Class 1 and Class 2 contributions.
To determine a person’s maximum contribution liability
for the 2003/2004 tax year, the following calculation is used:
Step 1
Deduct the relevant Primary Threshold from the relevant Upper
Earnings Limit and multiply that figure by 53.
(Here ‘relevant’ means the Primary Threshold and
Upper Earnings Limit in force during the year for which the maximum
is being calculated.)
Step 2
Multiply the result of step 1 by 11%
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.
Step 4
Deduct from the total found at step 3 the amount found at
step 1.
Step 5
If the figure produced at step 4 is a positive figure
multiply that figure by 1%.
If the figure produced by step 4 is a negative figure, it is
treated for the purposes of step 8 as nil
Step 6
Add together so much of the person’s earnings from each
employed earner’s employment as exceeded the Upper Earnings
Limit.
Step 7
Multiply the result of step 6 by 1%
Step 8
Add together the results of steps 2, 5 and 7
.
The result of step 8 is the maximum amount of Class 1 or
Class 1 and 2 contributions that an earner can pay in respect of
the 2003/2004 tax year.
The exception to this is where the earner is either in:
Examples of the maximum calculations can be found at NIM01171 onwards.
