Class 4 NIC self assessment

northwest1965

I wonder if someone would guide me through the NIC Class 4 on profits @9%.
My profit for arguments sake is £15000. After my Personal allowance plus additional tax relief on interest (buy to let mortgage), do I them pay 9% NIC on the remaining figure?

Dazed_and_C0nfused

Personal Allowance and BTL tax credit has nothing to do with Class 4 NIC.

https://www.litrg.org.uk/tax-guides/self-employment/what-national-insurance-do-i-pay-if-i-am-self-employed

northwest1965

Dazed_and_C0nfused said:

Personal Allowance and BTL tax credit has nothing to do with Class 4 NIC.

https://www.litrg.org.uk/tax-guides/self-employment/what-national-insurance-do-i-pay-if-i-am-self-employed

so where does the NIC profit figure come from, net profits or gross profits? I am confused because the amount I have to pay tax on is say £3000 but the NIC class 4 is payable on £2970

Dazed_and_C0nfused

The Class 4 NIC is based on your taxable profit.

Class 4 NIC of £2,970 is due when taxable profits are £41,632.

£8,632 no NIC due

£33,000 x 9% = £2,970

https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

northwest1965

Thank you very much

Jeremy535897

I don't understand this question. It sounds as if you have a residential property with a mortgage on it that you let out? If so, this is not trading, it is property rental income, on which no national insurance is due. 

northwest1965

Jeremy535897 said:

I don't understand this question. It sounds as if you have a residential property with a mortgage on it that you let out? If so, this is not trading, it is property rental income, on which no national insurance is due. 

I work as a self employed cleaner which provides my income. (this year I have earnt below my tax allowance) I also have a house that I rent out with a BTL mortgage. It generates a profit every year.
My accountant has completed my accounts and says I need to pay Class 4 on the profits.

[Deleted User]

northwest1965 said:

Jeremy535897 said:

I don't understand this question. It sounds as if you have a residential property with a mortgage on it that you let out? If so, this is not trading, it is property rental income, on which no national insurance is due. 

I work as a self employed cleaner which provides my income. (this year I have earnt below my tax allowance) I also have a house that I rent out with a BTL mortgage. It generates a profit every year.
My accountant has completed my accounts and says I need to pay Class 4 on the profits.

You are required to pay Class 4 NIC on the profits from your cleaning business only!

Jeremy535897

If therefore for 2019/20 we assume you earn £10,000 net from your cleaning business, and £2,000 net from your property, it works like this (ignoring the technicalities over how you get tax relief for the mortgage interest on the BTL, as they won't alter things):

Tax is on £10,000 + £2,000 = £12,000 less personal allowance £12,500 so is nil
Class 4 NIC is £10,000 - £8,632 = £1,368 x 9% = £123.12
Class 2 NIC is due of £159.00 (yearly figure)

northwest1965

Jeremy535897 said:

If therefore for 2019/20 we assume you earn £10,000 net from your cleaning business, and £2,000 net from your property, it works like this (ignoring the technicalities over how you get tax relief for the mortgage interest on the BTL, as they won't alter things):

Tax is on £10,000 + £2,000 = £12,000 less personal allowance £12,500 so is nil
Class 4 NIC is £10,000 - £8,632 = £1,368 x 9% = £123.12
Class 2 NIC is due of £159.00 (yearly figure)

where does the £8632 come from?

Dazed_and_C0nfused

northwest1965 said:

Jeremy535897 said:

If therefore for 2019/20 we assume you earn £10,000 net from your cleaning business, and £2,000 net from your property, it works like this (ignoring the technicalities over how you get tax relief for the mortgage interest on the BTL, as they won't alter things):

Tax is on £10,000 + £2,000 = £12,000 less personal allowance £12,500 so is nil
Class 4 NIC is £10,000 - £8,632 = £1,368 x 9% = £123.12
Class 2 NIC is due of £159.00 (yearly figure)

where does the £8632 come from?

Have a read of this.
https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions