NI when both employed and self-employed

KiKi

Don't usually find myself posting a question, but I couldn't find an answer on the HMRC site.

Currently self-employed, paying Class 2 and Class 4 NI.
As of next week I will also be employed, paying Class 1.

My employment will be until the end of the tax year, but I will continue to be self-employed during that time.

As I'll be paying Class 1 for my employed work, do I still continue to pay Class 2 and Class 4 as usual for my self-employed earnings? I think I saw somewhere on here that if you pay Class 1, then it affects the way you pay SE NICs. Can't find anything on the HMRC site.

Thanks if anyone can advise.
KiKi

KiKi

Can anyone help, please?
KiKi

SarEl

IUf you haven't got an answer by MOnday, PM me and I'll ask my accountant!

SarEl

Ps - found this http://www.hmrc.gov.uk/working/intro/employed-selfemployed.htm

Does it help?

basscadette

Hi I can actually answer this one!
It depends on your self-employed earnings.

Up to £5315 income (regardless of profit) - You can get a class 2 exemption. You are fine doing this if you are also employed as your 'stamp' will be covered by this.
Over £5315 earnings - about £2.50 per week Class 2 only
When your Profit exceeds £7225, you start to pay 9% Class 4 NI's. Note this is on your profit - not your earnings, unlike Class 2.

Hope this helps - you helped me a lot earlier today :-)

PlutoinCapricorn

It continues to depend on how much your self employment income is: paying class 1 under PAYE will not affect your liability for class 2 and class 4 if your other income is over the limit.

Getting a PAYE job would only make a difference if your self employment income was low enough to claim exemption for class 2 but you were paying it anyway to get entitlement to certain benefits. In that case, you could stop paying class 2 as the class 1 would qualify you for the benefits.

KiKi

SarEl wrote: »

Ps - found this http://www.hmrc.gov.uk/working/intro/employed-selfemployed.htm

Does it help?

Thanks SarEl, that's great - I couldn't find that on their site, despite searching!

basscadette wrote: »

Hi I can actually answer this one!
It depends on your self-employed earnings.

Up to £5315 income (regardless of profit) - You can get a class 2 exemption. You are fine doing this if you are also employed as your 'stamp' will be covered by this.
Over £5315 earnings - about £2.50 per week Class 2 only
When your Profit exceeds £7225, you start to pay 9% Class 4 NI's. Note this is on your profit - not your earnings, unlike Class 2.

Hope this helps - you helped me a lot earlier today :-)

Thank you. I knew about the Class 2 and Class 4 limits, but wasn't sure if they change when you're employed, too; I think it was the way that Class 1 affects your 'stamp' as you put it, that I must be thinking of!

PlutoinCapricorn wrote: »

It continues to depend on how much your self employment income is: paying class 1 under PAYE will not affect your liability for class 2 and class 4 if your other income is over the limit.

Thanks, I'm not sure why I thought it did. I think it must be the issue of 'covering yourself' contribution-wise with the Class 2 that I'm muddling it up with. Either way, I'll be over all the limits for SE anyway, so I'll just pay as normal.


Thanks everyone for your help.
KiKi

bossbuild

Try having a look around on google for freelance tax guides

donquine

Hi Kiki,

Everyone has already pointed out that if you are both self-employed and employed and making a healthy level of profits in the sole trade, you will end up paying Classes 1, 2 and 4 NI.

What hasn't been made explicit is that there is a cap on that. The calculation is an absolute pain to do; it's called an annual maxima calculation and the way to deal with it to get HMRC to work it out for you. Just make an application for deferment of Class 4 and see if HMRC write back saying, "yes, absolutely, that's fine" or "there's no way you should be getting a deferment, you're not paying stupid amounts of NI yet."

I would suggest sending in form CA72B as a punt and seeing what comes back. You might gain nothing from the exercise or you might be pleasantly surprised.

Hope that clarifies the situation for you, do let me know if you're still confused!

KiKi

donquine wrote: »

Hi Kiki,

Everyone has already pointed out that if you are both self-employed and employed and making a healthy level of profits in the sole trade, you will end up paying Classes 1, 2 and 4 NI.

What hasn't been made explicit is that there is a cap on that. The calculation is an absolute pain to do; it's called an annual maxima calculation and the way to deal with it to get HMRC to work it out for you. Just make an application for deferment of Class 4 and see if HMRC write back saying, "yes, absolutely, that's fine" or "there's no way you should be getting a deferment, you're not paying stupid amounts of NI yet."

I would suggest sending in form CA72B as a punt and seeing what comes back. You might gain nothing from the exercise or you might be pleasantly surprised.

Hope that clarifies the situation for you, do let me know if you're still confused!

Thanks very much - I'll look into that. Not sure what's defined as silly amounts, but it's certainly worth trying. If they say no, then I've lost nothing.

Thank you for the heads up.
KiKi