Class 4 N.I
jewels.p
Registered Posts: 1,774 Beyond epic contributor 🧙♂️
Can anyone advise me here.
If Taxable Profits for a SelfEmployed Person are £8529 what should the Class 4 payable be on this amount.
I calculated it as £8529  £6475 = £2054 x 20% = £410.80 Tax and Class 4 at £2054 x 8% = £164.32 but on the HMRC Website it automatically calculates Class 4 as £197.04. Is this an error?
Thanks
If Taxable Profits for a SelfEmployed Person are £8529 what should the Class 4 payable be on this amount.
I calculated it as £8529  £6475 = £2054 x 20% = £410.80 Tax and Class 4 at £2054 x 8% = £164.32 but on the HMRC Website it automatically calculates Class 4 as £197.04. Is this an error?
Thanks
0
Comments

I dont think the NI would be worked out on £2054 because the earnings limit for NI isnt £6475. As far as im aware its £5715 but this doesnt seem to fit in with the HMRC figure either so hopefully someone else can shef more light on this for you0

I dont think the NI would be worked out on £2054 because the earnings limit for NI isnt £6475. As far as im aware its £5715 but this doesnt seem to fit in with the HMRC figure either so hopefully someone else can shef more light on this for you
Hi Andrew,
I thought the Class 4 was calculated from your profit figure after deducting the £6475 Personal Allowance the same as the 20% Tax due?
Thanks for your reply0 
Based on 2010/11 limits, calculations will be:
the first £5715 will be Nil
on the rest (85295715) 2814 @ 8% 225.12
Therefore total class 4 NIC will be £225.120 

Agreed. Not sure how HMRC are getting £197.040

OK thanks for the replies.
I am studying Unit 18 at the moment so wasnt sure if this was incorrect or not! Had to rely on you experts to help me out with this.0 
Just thought I'd let you know I've discovered what the difference is. There was a £351 pension payment included in the £8529 so when I deducted that off then calculated the NI it was correct. £8529£351 = £8178 less £5715 = £2463 x 8% = £197.04.
That was bugging me so thanks again and hopefully if this comes up in the exam I will remember what to do after this! :laugh:0
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