Sole trader and employed?

koko900

If you are a sole trader and reach the thresholds, do you only pay class 2 NI and Class 4 NI, and then tax on your income totaled with the income received from where you are employed? Or are the profits from being a sole trader liable to different taxes?

dori2o

The class 2 is payable if your income from self employment is over the lower earnings threshold (£6025 for 17/18), or, you choose to pay it voluntarily.

Class 4 is payable on self employed profits over £8164 for 17/18.

Your self employment profit is effectively added to your employment and other income (investment income and dividends are taxed differently) and tax will be calculated using the tax rates applicable.

Therefore it's taxed as part of your total income not taxed separately.

koko900

Thanks, are the NI contributions first taken from the self employed profits before income tax, or from the total (with employed income) after they are added together?

dori2o

The class 2 and 4 deductions are calculated only from the self employments profits where they apply.

Pennywise

koko900 wrote: »

Thanks, are the NI contributions first taken from the self employed profits before income tax, or from the total (with employed income) after they are added together?

No, NIC contributions aren't deducted from income for tax purposes at all - they're not a tax allowable deduction.

[Deleted User]

Pennywise wrote: »

No, NIC contributions aren't deducted from income for tax purposes at all - they're not a tax allowable deduction.

I originally read it like that also. However, i now think the op means (as dori20 suggests):

Are the NI contributions first taken from

a) the self employed profits before income tax,

or

b) from the combined total of employed income and self-employed profits?

Hopefully, we will get clarification.

Pennywise

[Deleted User] wrote:

I originally read it like that also. However, i now think the op means (as dori20 suggests):

Are the NI contributions first taken from

a) the self employed profits before income tax,

or

b) from the combined total of employed income and self-employed profits?

Hopefully, we will get clarification.

Yes, you are probably right. Just that to me "taken from" means deducted from, whereas perhaps the OP means it as "calculated from".

[Deleted User]

Pennywise wrote: »

Yes, you are probably right. Just that to me "taken from" means deducted from, whereas perhaps the OP means it as "calculated from".

I am sure you have come across those who wish to claim their 'tax' as a deductible expenses - I know I have!