National Insurance contributions (Class 2 and class 4)
Thread poster: clairemcn
clairemcn
United Kingdom
Local time: 08:19
Member (2013)
French to English
+ ...
Dec 18, 2013

Hi everyone

Just a quick question...

The information in various places about NICs is quite contradictory...I rang HMRC twice today and was told two different things by two diffferent people (the new phone system is a nightmare!)

Anyway, what both people at HMRC told me was that Class 4 NICs are essentially a tax for people earning over a certain amount from self-employed work, basically that they are for high earners and someone with my earnings (profit of under £600 in the last tax year) shouldn't have to pay. Is that correct? The little box on the tax return says that you're exempt from them if you're under 16, over 65 or some other thing that doesn't apply to me, which seems to imply that I DO need to pay them.

Also confused about Class 2s...I know you can apply for a certificate of small earnings if your self-employed earnings are expected to be below £5700, which mine are, but I have additional income from my day job - does that make any difference? Can I still claim an exemption? My day job has irregular hours and I haven't worked at all for the past 3 months because I was doing a course - would that make any difference to my Class 2 contributions? And what if I do actually end up earning more than that through my self-employed work this tax year?

Any advice appreciated.


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dianaft  Identity Verified
United Kingdom
Local time: 08:19
Member (2013)
German to English
+ ...
NI separate Dec 18, 2013

The NI contributions on employed income (all employments) and self-employed income are calculated separately in contrast to the tax due being calculated on the total.
So you should be able to claim an exemption. Normally I would say it's not worth foregoing entitlements for £2.70 a week, but you have obviously paid NI from your job anyway.
For the coming tax year, why not apply for deferment? If you still have your job in the coming tax year, then you pay class 1 & 2 and therefore qualify for deferment. Everything is worked out at the end of the tax year then.


[Edited at 2013-12-18 07:45 GMT]

[Edited at 2013-12-18 07:46 GMT]


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Jessie LN
United Kingdom
Local time: 08:19
Spanish to English
+ ...
I just went through the same thing Dec 18, 2013

If you're also employed, the NICs you pay through PAYE will be Class 1. If you're paying enough of those to ensure your entitlement to things like the state pension, maternity allowance, jobseeker's allowance, etc, you shouldn't have to also pay Class 2. This is the case for me. I have a small-earnings certificate but I still pay Class 1 NIC through my part-time employment.

If you want to know if you're paying enough NIC to qualify for state benefits, have a look at the threshold information for Class 1 NICs in this guide: http://www.hmrc.gov.uk/helpsheets/e12.pdf

My pay from employment meets the Lower Earnings Limit so although NICs are not subtracted from my wages, I'd be treated as having paid them should I wish to claim any state benefits.

If your earnings do not meet the Lower Earnings Limit, you may want to voluntarily pay Class 2 NICs to ensure that you'll be entitled to state benefits.

It's so confusing, I know.


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Jessie LN
United Kingdom
Local time: 08:19
Spanish to English
+ ...
As for class 4... Dec 18, 2013

I've just ignored them because my profits are not yet between £7,755 and £41,450.
http://www.hmrc.gov.uk/working/intro/class4.htm#4


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clairemcn
United Kingdom
Local time: 08:19
Member (2013)
French to English
+ ...
TOPIC STARTER
Sorted out Dec 23, 2013

Thanks for the info! It has helped a lot and everything seems to be sorted now!

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Gabriele Demuth  Identity Verified
United Kingdom
Local time: 08:19
Member (2014)
English to German
Just got an exemption, but ... Jan 30, 2014

I am not really expecting to get over the £5700 until April, but I might come close.

When I registered as self-employed/sole trader they very quickly sent me a bill for NI contributions, which I found quite hefty (can't remember, but something like £40 for a quarter). Then I got an exemption, not expecting to earn that much. It went better than expected, so if I just go over the above amount, e.g. earn £6500, would I then have to pay that much? Its £160 per year!!! I never paid that much in NI contributions when I was employed. I couldn't find out any more on their website.


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clairemcn
United Kingdom
Local time: 08:19
Member (2013)
French to English
+ ...
TOPIC STARTER
Class 4 exemption certificate? Jan 27, 2015

Just a quick question...I'm pretty sure I'm exempt from paying Class 4 NICs as I'm a low earner (from my self employed work) but can't remember whether or not I have an exemption certificate for 13-14, which is what the tax return is asking. I've looked and can't find one. There appears to be an option to say you're exempt from Class 4 NICs but don't have a certificate - if I chose that option, could I ring up at a later date and sort the certificate out? Any advice appreciated!

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National Insurance contributions (Class 2 and class 4)

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