[F1Calculation of net earnings of directorsU.K.

20ZA.—(1) For the purposes of regulation 14A (normal weekly earnings of directors) the earnings of a claimant to be taken into account shall be his net earnings F2... and those 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) 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 Contributions and Benefits Act; and

(b)one-half of any sum paid by the claimant [F3in respect of a pay period] by way of a contribution towards an occupational or personal pension scheme.

(4) Where some or all of the claimant’s earnings are estimated under regulation 14A(2), those net earnings shall be calculated by taking into account the estimated gross earnings, less—

(a)an amount representing income tax, calculated by applying to those earnings the lower rate or, as the case may be, the lower rate and the basic rate of income tax in the year of assessment in which the claim was made, taking into account the personal relief to which the claimant would be entitled under sections 257(1), 257A(1) and 259 of the Income and Corporation Taxes Act 1988 (personal relief); except that if the period in respect of which the estimate is made is less than a year, [F4the earnings to which the lower rate of tax is to be applied] and the amount of the personal relief allowable under this sub-paragraph shall be reduced pro-rata;

(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 [F5, if the earnings so estimated were actual earnings.]]