Class 4 NIC for self employed- hould you get an allowance?

billymadbiker

Just checked a tax return caculation (2011/12)
Income on tax due about 24k.
Nat insurance (class4) due of 2.2k
Looking at the hmrc site indicates a lower threshold of 7225.
So at 9% shoukd be closer to 1.5k

Am I missing something?

System

Is £24K your total profit or is that the taxable figure after your £8105 tax free allowance has been taken off?

The class 4 threshold for 12/13 is £7605. So the 9% is charged on your profit minus the £7605

billymadbiker

I'm looking at 2011/12 so the allowance is 7475 but, yes, it's after that.
http://www.hmrc.gov.uk/rates/nic.htm
Shows a lower limit of 7225.
It also shows an upper limit of 42, 475.
It says the rate is 2% on anything above the upper limit and 9% between the upper and lower.
I would wo3k that out as being 0% on profit under 7725 so would pay 9% on 16k not 24k?

billymadbiker

Right, re-read and think I get it now.
Say my profit was 100k,
Nat ins was 9% with a 10k lower limit.
Tax was 20% with a 10k lower limit.
I would still only get a total allowance of the first 10k.
So would pay 29% in total on 90k?

Regshoe

Are you paying off a student loan? On a profit of £24k this would account for the difference between the £1.5k and £2.2k - the figures are shown lumped together on the return.

billymadbiker

No.
Never had any student loan.

zygurat789

billymadbiker wrote: »

Just checked a tax return caculation (2011/12)
Income on tax due about 24k.
Nat insurance (class4) due of 2.2k
Looking at the hmrc site indicates a lower threshold of 7225.
So at 9% shoukd be closer to 1.5k

Am I missing something?

Income tax due on £24K profit £32105
Class 4 due on £32105-7605 =24500 X 9% =£2205

purdyoaten

zygurat789 wrote: »

Income tax due on £24K profit £32105
Class 4 due on £32105-7605 =24500 X 9% =£2205

I think you have got it! Profit £32105 less personal allowances 8105 = £24000 taxable. Could not work this one out!