# The Family Credit (General) Regulations 1987, Regulation 20: Calculation of net earnings of employed earners

Extent: E+W+S+N.I.

(1) For the purposes of regulation 14 (normal weekly earnings of employed earners) the earnings of a claimant to be taken into account shall be his average weekly net earnings and where an estimate of earnings has been made in his case, as estimated, and those weekly net earnings shall be determined in accordance with the following paragraphs.
(2) There shall be disregarded from a claimant's net earnings, any sum, where applicable, specified in Schedule 1.
(3) A claimant’s net earnings shall, except where paragraph (4) or (4A) applies, be calculated by taking into account his gross earnings from that employment ..., less—
(a) any amount deducted from those earnings by way of—
(i) income tax;
(ii) primary Class 1 contributions under the Social Security Act ; and
(b) one-half of any sum paid by the claimant in respect of a pay period by way of a contribution towards an occupational or personal pension scheme; and
(c) the net amount of bonus or commission (if any) which is paid separately from his other earnings or is paid in respect of a period longer than the pay period relating to the other earnings with which it is paid and that net amount shall be the gross amount of that bonus or commission after deducting from it sums calculated in accordance with paragraphs (a) to (c) of regulation 20A (calculation of bonus or commission).
(4) Where the earnings of a claimant are estimated under paragraph (6), (6A) or (6B) of regulation 14 (normal weekly earnings of employed earners), his net earnings shall be calculated by taking into account those earnings over the period in respect of which the estimate is made, less—
(a) an amount in respect of income tax equivalent to an amount calculated by applying to those earnings the lower rate or, as the case may be, the lower rate and the basic rate of tax in the year of assessment in which the claim was made less only the personal relief to which the claimant is entitled under sections 8(1) and (2) and 14(1)(a) and (2) of the Income and Corporation Taxes Act 1970 (personal relief) as is appropriate to his circumstances; but, if the assessment period is less than a year, the earnings to which the lower rate ... of tax is to be applied and the amount of the personal relief deductible under this sub-paragraph shall be calculated on a pro rata basis;
(b) where the weekly amount of those earnings equals or exceeds the lower earnings limit, an amount representing primary Class 1 contributions under the Contributions and Benefits Act, calculated by applying to those earnings the initial and main primary percentages applicable at the date of claim in accordance with section 8(1) (a) and (b) of that Act; and
(c) one half of any sum which would be payable by the claimant by way of a contribution towards an occupational or personal pension scheme, if the earnings so estimated were actual earnings.
(4A) Where earnings are estimated under paragraph (6ZA) of regulation 14 (normal weekly earnings of employed earner in overseas territory), net earnings shall be calculated by taking into account those earnings over the period in respect of which the estimate is made, less—
(a) the amount (if any) of income tax deducted in respect of those earnings in accordance with the laws of the overseas territory concerned,
(b) the amount (if any) of social security contributions deducted in respect of those earnings in accordance with those laws, and
(c) one half of any sum which would be payable by the claimant by way of a contribution towards an occupational or personal pension scheme, if the earnings so estimated were actual earnings.
(5) When a claimant’s net earnings have been calculated in accordance with paragraph (3), his average net earnings in respect of his pay period shall be calculated as follows—
(a) the net earnings in each of the pay periods in his assessment period shall be aggregated, that total shall then be divided by the number of pay periods in his assessment period and the resulting amount shall be the average net earnings for his pay period;
(b) where in respect of any pay period, a claimant’s net earnings are twenty per cent. or more higher, or twenty per cent. or more lower, than his average net earnings, those net earnings and that pay period shall be omitted, his assessment period shall be reduced accordingly and his average net earnings shall, subject to sub- paragraph (c), be re-calculated in accordance with sub-paragraph (a);
(c) where the operation of sub-paragraph (b) results in no pay period remaining in a claimant’s assessment period there shall be omitted from the assessment period any pay period in which no earnings are received or in which the net earnings received are for a period longer than his normal pay period and his average net earnings shall be re-calculated in accordance with sub-paragraph (a);
(d) where the operation of sub-paragraph (c) results in no pay periods remaining, paragraph (6) of regulation 14 (normal weekly earnings of employed earners) and paragraph (4) of this regulation shall apply in his case.
(6) Where a claimant’s average net earnings for his pay period have been calculated in accordance with paragraph (5) and his pay period is—
(a) a week, a fortnight or four weeks, his average net earnings for his pay period shall be divided by the number of weeks in that period;
(b) a month, his average net earnings shall be multiplied by 12, the resulting product divided by 52;
(c) any shorter or longer period than those referred to in sub- paragraphs (a) and (b), his average net earnings for his pay period shall be multiplied by 7 and the product divided by the number equal to the number of days in his pay period,
and the resulting amount shall be his average weekly net earnings.

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Source: https://www.legislation.gov.uk/uksi/1987/1973/regulation/20 (the official version)
Page: https://openlegislation.uk/family-credit-general-regulations-1987/regulation-20
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.