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.