Class 2 and 4 NIC 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 £11,000Profits £13,500
No Class 2 NIC payable because of small profits exemptionClass 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

NICPaid byPaid on behalf of LimitsRates
Class 4Self employedSelf employed cash earnings£0-£12,570
£12,571-£50,270
£50,271 -onwards0%
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% = £135

    Total Class 4 NIC payable = £3,528

    Total NIC payable £3,707

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