calculating profit re NI Class 4

custard82

I am just about to set up as self employed, roughly halfway through the tax year. I have made the assumption that, as I wont hit the 40% tax band (incl my previous earnings), I should set aside roughly 30% for income tax, NI Class 2 & importantly Class 4.

What i am now wondering is whether the profit allowance of £5715 before Class 4 NI of 8%, is changed dependong on whether you have been self employed for the whole tax year. I may not go over the threshold in the first 6 months, which would mean I could get away without having to pay Class 4?!

fengirl_2

The 8% class 4 is chargeable on the profit assessable for the tax year. Although your first trading year will end in the tax year 2010-2011, you will have to apportion your profits to the current year and will be charged class 4 if your proportion of your profits for this year exceeds the 5715.