ESM3172 - How to work out the deemed payment: Step Eight - example using 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:
| earnings to date | £3,000 |
| the amount at Step Seven | £30,000 |
| the secondary Class 1 NICs threshold | £4,385 |
| the secondary Class 1 NICs percentage rate | 12.2% |
Using the template at ESM3171 the calculation is as follows:
| Enter in this box the earnings to date | 1 | 3,000 |
| Enter in this box the amount at Step Seven | 2 | 30,000 |
| Enter in this box the secondary Class 1 NICs earnings threshold | 3 | 4,385 |
| Enter in this box the secondary Class 1 NICs percentage rate | 4 | 12.2% |
| Deduct the figure in box 1 from the figure in box 3 and enter the result in this box | 5 | 1,385 |
| Deduct the figure in box 5 from the figure in box 2 and enter the result in this box | 6 | 28,615 |
| Multiply the figure in box 6 by 100 and enter the result in this box | 7 | 2,861,500 |
| Add 100 to the figure in box 4 and enter the result in this box | 8 | 112.2 |
| Divide the figure in box 7 by the figure in box 8 and enter the result in this box | 9 | 25,503 |
| Add the figure in box 9 to the figure in box 5 and enter the result in this box (a) | 10 | 26,888 |
| Deduct the figure in box 10 from the amount at box 2 (b) | 11 | 3,112 |
(a) this is the amount of the deemed payment - £26,888
(b) this is the amount of secondary Class 1 NICs due on the
deemed payment - £3,112
