Class 4 NICs - how to pay?

gettingthehangofthis

Hello MSE-ers,

Self-employed freelancer here. I completed my first Self Assessment form for last tax year in May, and was told I owed approx £400 in tax, and £300 in Class 4 NICs. I dutifully paid the £400 tax, but after plenty of Googling, can't for the life of me work out how to pay the remaining £300 NICs! I remember from when I was last self employed years ago, HMRC possibly sent me a letter after a while requesting payment, but this hasn't happened this time. Please can someone shed some light on how or when I pay this?

Thank you!

nick74

You pay Class 4 NI at the same time and in the same way as you pay income tax. The calculation should have shown the total amount due made up of income tax, class 2 NI and class 4 NI.

Log into your Self assessment account online and it should show the total amount due.

NSG666

As above. You make the payment for the full amount outstanding and they sort it.

Dazed_and_C0nfused

There isn't two separate bills.

As suggested you need to check your Self Assessment account and you will probably see a £400 credit plus £700 (as a single amount) to pay in January 2022.

gettingthehangofthis

Thanks all, it only mentions the £400 credit at the moment on my account. There was no mention of Class 2 NICs on the final tax calculation. Maybe I was just too keen and they will get in touch in January 2022 when it's due?

nick74

If there was Class 4 due there will almost certainly be Class 2 to pay also. Have you actually registered as self employed? There is a long standing issue with HMRC where if you don't register as self employed but complete the self employment pages of a tax return it won't calculate any Class 2, with the result that you won't be paying anything towards your state pension.

gettingthehangofthis

I only earned about 1k over the £12,570 allowance last tax year so maybe that's why. I have a UTR and a business tax account with HMRC. Maybe a phone call would help though, thank you.

Dazed_and_C0nfused

gettingthehangofthis said:

Thanks all, it only mentions the £400 credit at the moment on my account. There was no mention of Class 2 NICs on the final tax calculation. Maybe I was just too keen and they will get in touch in January 2022 when it's due?

That may be because the amount due (£700) is too far in the future to be shown yet?

You do need to get the Class 2 NIC situation sorted as that is what counts for State Pension (and other benefit) purposes. 

Class 4 doesn't get you any benefit there, it's really just an extra tax on profits.

gettingthehangofthis

Thank you, I will give HMRC a call  

gettingthehangofthis

nick74 said:

If there was Class 4 due there will almost certainly be Class 2 to pay also. Have you actually registered as self employed? There is a long standing issue with HMRC where if you don't register as self employed but complete the self employment pages of a tax return it won't calculate any Class 2, with the result that you won't be paying anything towards your state pension.

@nick74 Just called HMRC and they confirmed this was the case! Excellent knowledge, thank you! :-D