Sole Trader NI Question

Stitch123

Hi everyone,
I have recently taken the step to become a sole trader. My business is delivering online therapy on behalf of companies that hold NHS contractors. In short I get sent patients by the NHS and I do online therapy with them. I get paid a sessional rate.

I understand that I get paid gross, and that I have to pay income tax and NI on my profits via self assessment, and I know the thresholds for these.

I also have a permanent part time position within the NHS where I get a salary of £22,200 per year. I am paid PAYE and income tax and NI are deducted as usual.

My question is around NI for my sole trader work - do I need to factor in anything to do with my permanent NHS job when considering my NI payments for my sole trader work? I estimate I will make about £7k a year from it. My guess is that I don't but I wanted to double check for forecasting purposes.

Thanks

00ec25

Stitch123 wrote: »

My question is around NI for my sole trader work - do I need to factor in anything to do with my permanent NHS job when considering my NI payments for my sole trader work? I estimate I will make about £7k a year from it. My guess is that I don't but I wanted to double check for forecasting purposes.

could you expand on what you think you mean? NI applies to each income source in isolation.

"make" 7k in what - turnover or profit?

You say you understand the NI threshold, so you can work out if you will be claiming NI exemption on the sole trader profit or not. If not, then apply the NI maths to the sole trader

Stitch123

“NI applies to each income source in isolation” answers my question thanks.

I will turnover about £7000 in the year through sole trader work. I will have approximately £1000 in expenses, meaning I will be below the £6365 threshold for class 2.

happybagger

I am considering going self employed but my earnings from it will be under 5k pa. My question is, do you *have* to earn over 6365 pa to pay class 2, or can you pay class 2 under this?
I have a few years left to contribute to get the full state pension, but want to avoid paying class 3 at £15 per week.

Thiona

happybagger wrote: »

I am considering going self employed but my earnings from it will be under 5k pa. My question is, do you *have* to earn over 6365 pa to pay class 2, or can you pay class 2 under this?
I have a few years left to contribute to get the full state pension, but want to avoid paying class 3 at £15 per week.

If you are at the stage of considering going self employed, but do not plan to earn more than £5k pa, then this is either not going to be a full time role, or else perhaps you need to re-think your plans.

If this will only be something you do in your spare time, perhaps your regular employment will be enough to earn you enough NI credits

Norman_Castle

happybagger wrote: »

I am considering going self employed but my earnings from it will be under 5k pa. My question is, do you *have* to earn over 6365 pa to pay class 2, or can you pay class 2 under this?
I have a few years left to contribute to get the full state pension, but want to avoid paying class 3 at £15 per week.

Over the threshold they are compulsory, under the threshold they are voluntary so yes, you can choose to pay if under £6365.



https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions

happybagger

Thanks Norman, that table is clear, and just what I wanted to see 😀

Thiona, I have savings etc which will easily see me through, I won't have another job so won't be contributing via class 1.

I may continue in employment part time so *may* be above the LEL of £118 pw but haven't decided yet