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This example illustrates how to work out how much NICs has to be paid over at the end of the year in respect of the deemed payment where a company is involved and a salary has been paid during the year.

Mr F works through his service company, F Services Ltd. The company has relevant engagements during the year ended 5 April 2001. A deemed payment of 拢10334 is treated as paid at the end of the year. Mr F also received a salary of 拢20,000 during the year. His total earnings in the year are therefore 拢30,334

The employer鈥檚 NICs on the deemed payment is 拢1,261 and on the salary is 拢1,905.

Employment Income tax and Class 1 NICs are due on the total amount of earnings paid in the year and on the deemed payment.

The Class 1 NICs that are payable are as follows:

Employer鈥檚 Class 1 NICs

-	Amount
Total earnings in year	30334
Employer鈥檚 NICs on total earnings*	3166
Deduct	-
Employer鈥檚 NICs already paid in year on salary	1905
Additional employer鈥檚 NICs payable on deemed payment	1261

*This is calculated by:

• subtracting the Employer鈥檚 Earnings Threshold (拢4,385) from the total earnings (拢30,334) in the year; and
• then multiplying the resulting amount (拢25,949) by the employer鈥檚 NIC percentage rate for the period (in this case 12.2%).

Employee鈥檚 Class 1 NICs

-	Amount
Employee鈥檚 NICs due+	2343
Employee鈥檚 NICs already paid in year on salary	1605
Additional employee鈥檚 NICs payable	738

+This is calculated by:

• subtracting the Employee鈥檚 Earnings Threshold (拢4,385) from the Upper Earnings Threshold (or total earnings if lower) (拢27,820); and then
• multiplying the resulting amount (拢23,435) by the appropriate employee鈥檚 NICs percentage rate (in this case 10%).