Exempt from paying class 4 NICs?

thredder

Hello all,

I'm self employed. I'm currently trying to work out the payment on account figure for this current tax year (11/12) in order to pay with my self assessment this month. It certainly won't be the same as last year's so I have to change it, as they allow you to do.

Profits have been pretty poor, and after the personal allowance for the year (£7,745) has been taken off it's down to just under £3,000.

With that in mind, do I have to work out what the class 4 NICs will be in advance, or will I be exempt from paying them completely because the figure is so low? If I AM exempt from paying them at what stage do I tell hmrc?

For that matter, will I be exempt from class 2 also?

Thanks in advance!

skater_kat

http://www.hmrc.gov.uk/forms/cf10.pdf

thredder

Thanks.

Is the net profit figure the one you get AFTER you take your personal allowance off or before?

Mikeyorks

thredder wrote: »

With that in mind, do I have to work out what the class 4 NICs will be in advance, or will I be exempt from paying them completely because the figure is so low?

The Class 4 lower limit for 11-12 is £7225 ..... 9% above that.

Assume it's a typo - but the PA is £7475 ....... not the figure you've given.

thredder

Yes, it is a typo.

And yes, I know what the lower limit is but that still doesn't answer my question. Will I be paying no class 4 NICs for 11/12 if the profit after my personal allowance is less than £7225?

pjclar02

Hello there

Unfortunately you don't get your personal allowance as well as the £7,225 NIC free.

For class 4 NIC purposes you take your total taxable profit figure, deduct the £7,225, and then multiply the result by 9%. So you will pay some class 4 NICs - 9% on around £3,000ish from the figures in your original post = £270ish.

Hope this helps

Mikeyorks

thredder wrote:

Will I be paying no class 4 NICs for 11/12 if the profit after my personal allowance is less than £7225?

Profit less PA of £7475 = tax due (at 20%)

Profit less lower profits limit of £7225 = Class 4 due (@ 9%)

thredder

Thankyou.

So basically it's still just another way to fleece you out of as much money as they possibly can, and in effect I'm in a 29% tax bracket just for being self employed.

Terrific stuff. Great country.

Pennywise

thredder wrote: »

Thankyou.

So basically it's still just another way to fleece you out of as much money as they possibly can, and in effect I'm in a 29% tax bracket just for being self employed.

Terrific stuff. Great country.

And you'd be in the 32% tax bracket if you were an employee, so in fact, you're better off than an employee!