Class 4 National Insurance and your profits

Class 4 National Insurance is the final national insurance that is used by HMRC.  This is based on your self employed profits if they are over £8,424 (For the tax year 2018/19). 

How much do I pay?

If your profits are over £8,424 for the tax year 2018/19, then you will have to pay national insurance at 9% on the profit above £8,424 but below £46,350.  On profits that are above £46,350 then the amount of Class 4 NI, you will have to pay is 2% as well as the 9% up to this level.  However, if your self employed profits are below £8,424, then you don’t need to pay any Class 4 NI.

State benefits of Class 4 NI

The strange thing about Class 4 National Insurance is that they do not count towards any state benefits.  However, with the abolition of Class 2 NI in April 2019, Class 4 will be expected to contribute towards some state benefits. However, this has not yet been confirmed.

Paying your Class 4 NI

Class 4 NI is paid at the same time as your self assessment tax return and the Class 2 NI. These payments are therefore due in January and July.

If you are employed and self employed there is some relief on the amount you need to pay however, this will be calculated when you do your self assessment tax return.

More information about Class 4 NI can be found here:

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

and here:

https://www.gov.uk/national-insurance/national-insurance-classes

 

Feel free to get in touch if you have any queries.

Tax-Return-Checklist

As usual, if you would like any further details on this or any other accountancy matters, please follow this link:

The latest tax dates downloads can be found here:

Tax dates

 

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