More than one source of self-employment

Any self-employed person who has more than one source of self-employment is required to pay Class 4 National Insurance Contributions (NICs) on their total taxable profits. Class 4 NICs are paid by the self-employed as a percentage of annual taxable profits.

Class 4 NICs currently apply on assessable profits from £8,164. Between £8,164 and £45,000, NICs are payable at 9%. Any income above the Upper Profits Limit is liable to NICs at 2%.

However, the self-employed may need to adjust the amount of Class 4 NICs they pay in certain circumstances, otherwise they may overpay their NIC liabilities. See planning note below.

Planning note

The self-employed may be able to reduce their Class 4 NIC liability if:

  • Profits include income on which they have paid Class 1 National Insurance contributions;
  • Trade losses (not losses from furnished holiday lettings) that haven’t been deducted when working out Class 4 National Insurance profits;
  • Any interest from a loan used to invest in a partnership or to provide plant and machinery for partnership use, that they haven’t already taken off when working out their profits – not all loans or partnerships can qualify.

If you are uncertain how these adjustments could be applied to your circumstances, we would be more than happy to help you with the calculations.

 

Posted in National Insurance

Exeter Accountant MJ Smith & Co

Celebrating 25 years of excellence.

Free 1st Meeting
Fixed Fees
Free Support!

Find out more

Client Portal Login

Forgot Password?

Latest News

Employee tax codes 2019-20

The P9X form is used to notify employers of the tax codes to use for employees. The basic Personal Allowance …
Read More

Sale of income by an individual

A capital sum received by an individual in respect of the sale or relinquishment of income to be derived from …
Read More

What are the badges of trade?

The ‘badges of trade’ tests, whilst not conclusive, are used by HMRC to help determine whether an activity is a …
Read More

Twitter Feed