NIM12032 - Class1: Calculating Class1 NICs for Directors: Annual earnings periods: Examples: Fees voted - 2000/01
Regulation 8 SSCR 2001
Company accounts year-end is 30 June 2000. Director does not receive salary but is voted £36000 fees at AGM held on 20 September 2000. The NICs amounts are also rounded down for ease of presentation.
| Date | Cumulative | Primary | Secondary | Notes |
| April to August | Nil | Nil | Nil | No earnings paid |
| 20 September | £36000 | £2386 (27820 - 3952 @ 10%) | 3857 (36000 - 4385 @ 12.2%) | Earnings above earnings thresholds but primary NICs restricted to earnings up to UEL* |
| October to March | £36000 | £2386 | £3857 | No further earnings |
The question to ask in this example is “How does director
pay for his or her living expenses in period before earnings
voted?” The fees voted and paid in the previous year might
have been withdrawn at regular intervals from the personal bank
account. There might be another source of income and/or there could
be drawings from a loan account with the company. If the loan
account is used, there could be payments in advance of earnings
within regulation 22 SSCR 2001, see
NIM12014. If it is not apparent how the
director can fund his or her lifestyle before the voting of
remuneration, you should inform the Inspector of Taxes who deals
with the company accounts.
* The above example is for a tax year prior to 6 4 2003. From
6 4 2003, a new primary liability was introduced on all earnings
above the Upper Earnings Limit. This should be taken into account
when applying the example to tax years 2003/2004 onwards. Full
guidance on the new primary liability on earnings above the Upper
Earnings Limit is provided at
NIM01100.
