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Post Info TOPIC: SA for Self employment and Class 4 NICs
Tammy


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SA for Self employment and Class 4 NICs
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Hi everyone,

On a SA for a self employed, I understand total income on which tax is due is profit from self employment minus personal allowance (£8105 for 2012/13).

Let's say the resultant figure is £15000 (£23105-£8105).

When it comes to Class 4 NICs, do I go £15000 x 9% to get the figure of £1350 for Class 4 NICs OR is it £15000 - £7605 (class 4 lower profits limit) = £7395 then apply the 9% to get £665.55?

OR, is it £23105-£7605 (instead of £8105) to get £15500 then apply 9% to get £1395.

I'm getting confused by the personal allowance and the lower profits limit figures, where to apply what and when. Can somebody please help me.

 

Many thanks

 



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Tammy
Don Tax


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OR, is it £23105-£7605 (instead of £8105) to get £15500 then apply 9% to get £1395.

That is the correct way, Tammy.   I wonder what the Office of Tax Simplification are doing these days :)

There have been frequent attempts and calls to harmonise these rates but we never seem to get any nearer to achieving anything.

By the way, re. your first line, all other taxable income should go into the equation, not just self employed income.

 

best wishes,

TIm



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MarkS


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Hi Tammy

Taxed at income tax rate 20% on £15,000 (£23,105-£8105) ie £3,000

Tax at Class 4 NIC rate 9% on £15,500 (£23,105-£7605) ie £1,395

So total due £4,395

Mark



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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
Tammy


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Hi Tim and Mark,

Thank you guys, really appreciate the further explanations as well, very clear now.

Kindest regards

T

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Tammy
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