CAT / FIA FTX Syllabus B. Adjusted Profit / Loss Computations - Class 2 and 4 NIC - Notes 1 / 1
Contributions for the self employed
Class 2 NIC is £3.45 per week for 23/24
The small earnings exemption is £12,570 which means that if the trading profits are below this figure no Class 2 NIC is payable.
If trading profits are above this amount then £3.45 is paid per week.
Profits £11,000 | Profits £13,500 |
---|---|
No Class 2 NIC payable because of small profits exemption | Class 2 NIC payable = 52 weeks * £3.45 = £179 |
Class 4 NIC is payable by the self employed on behalf of their earnings
The rates of Class 4 NIC are 9% and 2%.
The rate of 0% is paid on profits below £12,570.
The rate of 9% is paid on profits between £12,571-£50,270
The rate of 2% is paid on all profits over £50,270
NIC | Paid by | Paid on behalf of | Limits | Rates |
---|---|---|---|---|
Class 4 | Self employed | Self employed cash earnings | £0-£12,570 £12,571-£50,270 £50,271 -onwards | 0% 9% 2% |
Illustration
Calculate the NIC payable by Shobha if she is self-employed in 23/24 and has self-employed income of £57,000.
Solution
Class 2 NIC payable = £3.45 * 52 weeks = £179
Class 4 NIC payable:
£12,570 * 0% = £0
£50,270-£12,570 = £37,700 * 9 % = £3,393
£57,000 - £50,270 = £6,730 * 2% = £135Total Class 4 NIC payable = £3,528
Total NIC payable £3,707
Previous
Partnerships and limited liability partnerships
Syllabus B. Adjusted Profit / Loss Computations
B5. Partnerships
Next up
Self-employed supplementary pages
Syllabus B. Adjusted Profit / Loss Computations
B7. Prepare relevant pages of a tax return