How is Class 4 NI Calculated?

JohnBoy59_2

Hello knowledgeable ones!!

Can someone explain how Class 4 NI is calculated, specifically is it:

INCOME
LESS HMRC PERSONAL ALLOWANCE (IE £8,105)
LESS ALLOWABLE EXPENSES
LESS LOWER LIMIT THRESHOLD (£7,605)
BALANCE @ 9%

Or is HMRC personal allowance not deducted before calculating Class 4 NI??

Many thanks.

roger_c

The income tax personal allowance is not deducted. Very simplified example:-

Say your profits (income less expenses) are £30,000.
Deduct Class 4 lower profits limit: -£7,605
'NICable' profits: £22,395

Class 4 Due: £22,395 x 9% = £2,015.55

HappyMJ

JohnBoy59 wrote: »

Hello knowledgeable ones!!

Can someone explain how Class 4 NI is calculated, specifically is it:

INCOME
LESS HMRC PERSONAL ALLOWANCE (IE £8,105)
LESS ALLOWABLE EXPENSES
LESS LOWER LIMIT THRESHOLD (£7,605)
BALANCE @ 9%

Or is HMRC personal allowance not deducted before calculating Class 4 NI??

Many thanks.

Only the lower profits limit is deducted. Not the personal allowance.

http://www.hmrc.gov.uk/rates/nic.htm

JohnBoy59_2

Many thanks guys.