Class 4 N.I

jewels.p
jewels.p Registered Posts: 1,758 Beyond epic contributor 🧙‍♂️
edited 12:11PM in AAT member discussion
Can anyone advise me here.

If Taxable Profits for a Self-Employed 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

Comments

  • andrewtdk
    andrewtdk Registered Posts: 148 Dedicated contributor 🦉
    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
  • jewels.p
    jewels.p Registered Posts: 1,758 Beyond epic contributor 🧙‍♂️
    andrewtdk wrote: »
    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 reply
  • bumblebee
    bumblebee Registered Posts: 130 Dedicated contributor 🦉
    Based on 2010/11 limits, calculations will be:

    the first £5715 will be Nil
    on the rest (8529-5715) 2814 @ 8% 225.12

    Therefore total class 4 NIC will be £225.12
  • A-Vic
    A-Vic Registered Posts: 6,868 Beyond epic contributor 🧙‍♂️
    http://www.hmrc.gov.uk/rates/nic.htm
  • burg
    burg Registered, Moderator Posts: 1,425 mod
    bumblebee wrote: »
    Based on 2010/11 limits, calculations will be:

    the first £5715 will be Nil
    on the rest (8529-5715) 2814 @ 8% 225.12

    Therefore total class 4 NIC will be £225.12

    Agree

    And if it is for 2009/10 the rates are the same anyway.
    Regards,

    Burg
  • Gem7321
    Gem7321 Registered Posts: 1,412 Beyond epic contributor 🧙‍♂️
    Agreed. Not sure how HMRC are getting £197.04
  • jewels.p
    jewels.p Registered Posts: 1,758 Beyond epic contributor 🧙‍♂️
    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.
  • jewels.p
    jewels.p Registered Posts: 1,758 Beyond epic contributor 🧙‍♂️
    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:

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