Pensions and CLass 4 NICs

Grando101

Hi, I'm self-employed and thinking of investing in a personal pension of some description this tax year, partly in order to reduce my tax bill (but largely because I feel I need to start investing in some sort of pension).

In simple terms, let's say my profit in this tax year is £10,000. If I were to put £2,000 into a personal pension, does this directly reduce my profit to £8,000 - thus reducing my income tax liability, as well the 8% Class 4 NIC contrinbutions due on any profits over c£5,500 ?

Sorry to ask such a 'thick' question, but I am finding it hard getting my head around tax relief, and nowhere online seems to address the NIC question... I don't have an accountant as generally my tax return is very straightforward.

Thanks in advance. Hopefully this question makes sense!

Grando101

Anyone? Basically the bit I'm puzzled by is the effect of making a personal pension contribution on my year's 'profit'. Does it effectively reduce it, thereby also reducing the liability for Class 4 NICs as well as income tax?

averageguy11

Ring a tax office?