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# Class 4 N.I

Font Of All KnowledgeRegistered Posts: 1,774

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

• Well-Known Registered Posts: 150
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
• Font Of All Knowledge Registered Posts: 1,774
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?

• Well-Known Registered Posts: 135
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
• Expertise Guaranteed Registered Posts: 6,970
• Experienced Mentor GloucesterModerator, FMAAT, AAT Licensed Accountant Posts: 1,440
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
• Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
Agreed. Not sure how HMRC are getting £197.04
• Font Of All Knowledge Registered Posts: 1,774
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.
• Font Of All Knowledge Registered Posts: 1,774
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: