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.
During the current 2021-22 tax year, no Class 4 NICs currently apply on assessable profits of up to £9,568. NICs are payable at 9% on profits between £9,569 and £50,270. Any income above £50,270, known as the Upper Profits Limit, is liable to NICs at 2%.
However, the self-employed may need to work out an adjustment if they have:
- Profits 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 deducted when working out their profits – not all loans or partnerships can qualify
Note, that from April 2022, there will be a 1.25% increase in all NIC rates for one year to contribute to increases in the NHS and social care budgets. From April 2023, these increases will be incorporated into a new Levy.
MJB Avanti | 08000 388799