ESM3170 - How to work out the deemed payment: Step Eight - example
This example demonstrates how to apportion the amount at Step
Seven of the deemed payment calculation between the deemed payment
and the secondary Class 1 NICs on that payment.
This example is also reproduced at
ESM3172 using a step by step guide.
Ms G is a worker whose service company has earned income
from a relevant engagement. The service company paid her a salary
of £3,000 during the year. The amount at Step Seven is
£30,000. This produces the following figures:
| x | = | Earnings to date | 3,000 |
| y | = | The amount at Step Seven | 30,000 |
| a | = | The secondary Class 1 NICs threshold | 4,385 |
| b | = | The secondary Class 1 NICs percentage rate | 12.2% |
Using the formula:
((y-(a-x))x100/(100+b))+(a-x),
the deemed payment is equal to
((30,000-(4,385-3,000))*100/(100+12.2))+(4,385-3,000)
= 30,000-1,385*100/112.2+1,385
= £26,888
The secondary Class 1 NICs payable in respect of the deemed
payment are £3,112.
