Tax Calculation & class 4NIC

ACServices
ACServices Registered Posts: 7 Regular contributor ⭐ ? ⭐
Hi,

Am I right in saying that on a basic tax calculation for self assessment if someone earned a profit of circa £8.9k
they would pay tax and class 4 of circa £450 this is for the yr 2011/12
or would this be more/less due to them earning paye gross of £3.9k and paid tax of 330 before becoming self employed.
All class 2 is paid.

Thanks for the assistance.

Regards

Andy

Comments

  • T.C.
    T.C. Registered, Tutor Posts: 1,448
    A bit confused with your question? Can you explain a little?
  • reader
    reader MAAT, AAT Licensed Accountant Posts: 1,037
    ACServices wrote: »
    Hi,

    Am I right in saying that on a basic tax calculation for self assessment if someone earned a profit of circa £8.9k
    they would pay tax and class 4 of circa £450 this is for the yr 2011/12
    or would this be more/less due to them earning paye gross of £3.9k and paid tax of 330 before becoming self employed.
    All class 2 is paid.

    Thanks for the assistance.

    Regards

    Andy

    Gross income = Salary + Profits = £3,900 + £8,900 = £12,800
    Taxable income = Gross income - Personal allowance = £12,800 - £7,475 = £5,325
    Income tax at 20% on taxable income = £5,325 x 20% = £1,065
    Tax Due = Tax liability - Tax deducted at source = £1,065 - £330 = £735 payable by 31/01/2013

    Class 4 National Insurance @ 9% on profits above £7,225 therefore:
    (£8,900 - £7,225) x 9% = £151 payable by 31/01/2013

    Therefore total payable by 31/01/2013 = Income Tax + National Insurance = £735 + £151 = £886*

    *No payments on account are required as tax due (£735) is less than £1,000.
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