Paying National Insurance as a newly starting out Sole Trader?!

stayfrostea

Good evening, 

I was recently made redundant as an electrician at a company. I have now registered with HMRC as a sole trader and enrolled on the Construction Industry Scheme (CIS). I understand that as part of this the company I am subcontracting to automatically deducts 20% for tax purposes. As I had to quickly go self-employed to find work I hadn't had chance to looking into the National Insurance side of things. I know I will be required to pay both class 2 and class 4 contributions given my income, my main question is how and when do I pay these contributions? My main concern is not receiving a large bill at the end of the tax year. Other lads in my position have said that when they do their self-assessment they typically receive enough money to off-set national insurance payments. Again my main question is how and when do I pay these?

TIA 

Dazed_and_C0nfused

They are part of your annual Self Assessment calculation (SA302) which is generated when you complete your return.

If you commenced self employment in the current tax year you will need to complete your first tax return, for 2022:23, by 31 January 2024 (but absolutely no reason whatsoever to leave it until the last minute 😉).

Any tax, NI, HICBC or student loan payments due for 2022:23 will be payable on 31 January 2024.  You can make payment via the Self Assessment part of your Personal Tax Account I think.

Marcon

See https://www.gov.uk/browse/business/business-tax and scroll down to the section headed CIS.

Also helpful: https://www.gov.uk/set-up-self-employed

Very good luck with your new venture.

Kim1965

You will pay 9. 7% ní on profit over 11.9k i think. Cis at 20% may not cover the ní, will all your income come from customers who deduct cis?? If not you are better saving some towards the ní bill as you earn.
Keep tabs on the cis deductions and retain safely the cis vouchers for your accountants. By law you should get them monthly. Dont assume hmrc will know that cis has been deducted, you need the paperwork to prove it, its a poor systém that has caught mě out a few times....this is the construction industry. 
   

xylophone

Have you made arrangements for a pension?

stayfrostea

Kim1965 said:

You will pay 9. 7% ní on profit over 11.9k i think. Cis at 20% may not cover the ní, will all your income come from customers who deduct cis?? If not you are better saving some towards the ní bill as you earn.
Keep tabs on the cis deductions and retain safely the cis vouchers for your accountants. By law you should get them monthly. Dont assume hmrc will know that cis has been deducted, you need the paperwork to prove it, its a poor systém that has caught mě out a few times....this is the construction industry. 
   

all my income will come from contractors, I only intend on sub-contracting, through CIS. If I continue with the work I am currently doing at the current rate I am on, my after tax salary will be around £50,000. I have only been subcontracting to this company for just under a month

stayfrostea

Dazed_and_C0nfused said:

They are part of your annual Self Assessment calculation (SA302) which is generated when you complete your return.

If you commenced self employment in the current tax year you will need to complete your first tax return, for 2022:23, by 31 January 2024 (but absolutely no reason whatsoever to leave it until the last minute 😉).

Any tax, NI, HICBC or student loan payments due for 2022:23 will be payable on 31 January 2024.  You can make payment via the Self Assessment part of your Personal Tax Account I think.

so I cannot just pay NI contributions on a weekly basis as I get paid? 

Marcon

stayfrostea said:

Kim1965 said:

You will pay 9. 7% ní on profit over 11.9k i think. Cis at 20% may not cover the ní, will all your income come from customers who deduct cis?? If not you are better saving some towards the ní bill as you earn.
Keep tabs on the cis deductions and retain safely the cis vouchers for your accountants. By law you should get them monthly. Dont assume hmrc will know that cis has been deducted, you need the paperwork to prove it, its a poor systém that has caught mě out a few times....this is the construction industry. 
   

all my income will come from contractors, I only intend on sub-contracting, through CIS. If I continue with the work I am currently doing at the current rate I am on, my after tax salary will be around £50,000. I have only been subcontracting to this company for just under a month

If you follow the link I've given above that should explain the position. You can make payments towards tax and NI at any time once you've registered for online tax services, which I presume you've done/will be doing imminently?

stayfrostea

Marcon said:

stayfrostea said:

Kim1965 said:

You will pay 9. 7% ní on profit over 11.9k i think. Cis at 20% may not cover the ní, will all your income come from customers who deduct cis?? If not you are better saving some towards the ní bill as you earn.
Keep tabs on the cis deductions and retain safely the cis vouchers for your accountants. By law you should get them monthly. Dont assume hmrc will know that cis has been deducted, you need the paperwork to prove it, its a poor systém that has caught mě out a few times....this is the construction industry. 
   

all my income will come from contractors, I only intend on sub-contracting, through CIS. If I continue with the work I am currently doing at the current rate I am on, my after tax salary will be around £50,000. I have only been subcontracting to this company for just under a month

If you follow the link I've given above that should explain the position. You can make payments towards tax and NI at any time once you've registered for online tax services, which I presume you've done/will be doing imminently?

I am registered for self-assessment. Unless there is something else I need to do I cannot see where I pay NI

Marcon

stayfrostea said:

Marcon said:

stayfrostea said:

Kim1965 said:

You will pay 9. 7% ní on profit over 11.9k i think. Cis at 20% may not cover the ní, will all your income come from customers who deduct cis?? If not you are better saving some towards the ní bill as you earn.
Keep tabs on the cis deductions and retain safely the cis vouchers for your accountants. By law you should get them monthly. Dont assume hmrc will know that cis has been deducted, you need the paperwork to prove it, its a poor systém that has caught mě out a few times....this is the construction industry. 
   

all my income will come from contractors, I only intend on sub-contracting, through CIS. If I continue with the work I am currently doing at the current rate I am on, my after tax salary will be around £50,000. I have only been subcontracting to this company for just under a month

If you follow the link I've given above that should explain the position. You can make payments towards tax and NI at any time once you've registered for online tax services, which I presume you've done/will be doing imminently?

I am registered for self-assessment. Unless there is something else I need to do I cannot see where I pay NI

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

It gives you a lot of helpful information, including a precise answer to the question 

How and when do I pay my Class 2 and Class 4 NIC?

Dazed_and_C0nfused

stayfrostea said:

Marcon said:

stayfrostea said:

Kim1965 said:

You will pay 9. 7% ní on profit over 11.9k i think. Cis at 20% may not cover the ní, will all your income come from customers who deduct cis?? If not you are better saving some towards the ní bill as you earn.
Keep tabs on the cis deductions and retain safely the cis vouchers for your accountants. By law you should get them monthly. Dont assume hmrc will know that cis has been deducted, you need the paperwork to prove it, its a poor systém that has caught mě out a few times....this is the construction industry. 
   

all my income will come from contractors, I only intend on sub-contracting, through CIS. If I continue with the work I am currently doing at the current rate I am on, my after tax salary will be around £50,000. I have only been subcontracting to this company for just under a month

If you follow the link I've given above that should explain the position. You can make payments towards tax and NI at any time once you've registered for online tax services, which I presume you've done/will be doing imminently?

I am registered for self-assessment. Unless there is something else I need to do I cannot see where I pay NI

You can make voluntary payments onto your Self Assessment account anytime you wish.

But the Class 2 & 4 NI is part of your Self Assessment calcualtion so won't actually exist until you file your tax return.  And even then it isn't actually payable until 31:01:2024 (for the current tax year).

You are running a business, you're not an employee so no NI has to be paid/deducted each time you are paid.