NIC for Companies and Soletraders

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
NIC for soeltraders is class 2 and is this always calculated for an entire year ie £2pw x 52weeks even if they only traded for part of the year?? Then its 8% between 4615-30420 and 1% 30420 amd upper limit????<BR><BR>What about the calc for limited companies?????

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    NIC for Companies and Soletraders

    <BR><BR>The 8% is class 4, plus 1% over upper limits (sole traders have to pay both class 2 and 4)<BR><BR>Limited companies don't pay NIC, however, an employer must pay 12.8% towards each employee's 11% NIC Class 1 plus Class 1A (benefits in kind).<BR><BR>This is 'national insurance' that goes towards providing sick pay, maternity leave, job seekers allowance etc, should you need it.<BR><BR>It is payable after the first £89 up to £590 (check this) of weekly earnings, after which amount the employee pays 12.8% (_?) Y03/04<BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    NIC for Companies and Soletraders

    Roxy...<BR><BR>It's Class 4 you are talking about and £4615 is not taxed, that is why we minus this from the upper limit which is £30940 not what you said, multiply the result by 8% The remaining of the Schudule DI profit is then multiplied by 1% and both results are added to the Class 2 (£2 x 52 weeks = £104) <BR><BR>We were also told to revise the primary class 1 (this is the one that is taken from gross pay at 12.8 % where £89 is not taxed payable on the 19th of the following month after payroll.<BR><BR>This class one is what gets me, because they is primary class 1, secondary class 1 and class 2a<BR><BR>I am just hoping that we will only have to calculate classes 2 & 4 and just explain how class 1 is calculated.<BR><BR>poohbear, I know you have a better understanding of NI, how is the class 1 calculated exactly?<BR><BR>Nafisa
  • System
    System Posts: 100,534 🤖 Admin 🤖
    NIC for Companies and Soletraders

    <BR><BR>It's deducted at source, like PAYE, and works the same way as Class 4, except it's calculated at 11% (+1% on upper limits). At the same time, the employer pays a flat 12.8%.<BR><BR>I shouldn't worry about this because we won't be asked to compute this on either paper<BR><BR><BR>

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