When do i pay class 4 nic

Unlike Class 2 contributions, Class 4 contributions are taken into account in computing payments on account. If you would like more information on National Insurance contributions please give us a call on or email us here. Facebook Twitter. How do Class 4 National Insurance contributions work? You can change your cookie settings at any time. You work out your profits by deducting your expenses from your self-employed income.

You can see National Insurance rates for past tax years. Some self-employed people do not pay National Insurance through Self Assessment, but may want to pay voluntary contributions. These are:. Check what you need to do. To help us improve GOV.

It will take only 2 minutes to fill in. You currently pay two different classes of NIC if you are self-employed — Class 2 and Class 4, these different classes are summarised in the below. If you are a married woman or widow, who is entitled to pay reduced rate contributions , you do not need to pay Class 2 NIC. There are special rules relating to share fishermen , volunteer development workers , and those engaged as examiners and exam markers which you can read about on GOV.

This includes not only income that we might traditionally think of as self-employed income, but also anyone carrying on a business activity — even if that might be considered to be an investment activity like property letting. Do note, though, that we are talking about a business activity.

It is unlikely that letting a single property would amount to a business activity. You can find out about registration at How do I register for tax and National Insurance? The table below summarises the differences between Class 2 and Class 4 NIC including how much and when you make payments.

The amount of Class 2 NIC due is based on the number of weeks of self-employment in the tax year. A week runs from a Sunday morning to midnight on Saturday. Class 4 NIC are based on the level of your self-employed profits.

You are only liable to pay Class 4 NIC if your profits are over a certain level, the lower profits limit. His Class 4 NIC liability is calculated as follows:.

Her Class 4 NIC liability is calculated as follows:. If you make payments on account then your Class 4 NIC will be included when calculating the instalments, if you do not pay your tax through payments on account then the Class 4 NIC will be due on 31 January following the end of the tax year to which it relates.

Class 2 NIC is paid as part of the payment due on 31 January following the end of tax year, regardless of whether or not you make payments on account. We explain why below. If you prefer, you can make regular payments of Class 2 NIC throughout the tax year, rather than a lump sum payment.

You should contact HMRC to arrange this. If you are employed and self-employed and you pay the maximum amount of employees NIC Class 1 then you may not need to pay Class 2. It is due by the 31 January following the end of the tax year as part of the Self Assessment process. It is not included in any payments on account. You can read about this in our news article. It is paid as part of the Self Assessment process, so payment may be due as part of any payments on account or by the 31 January following the end of the tax year if you are not within the scope of payments on account.

It is paid as part of your Self Assessment tax. This relates to Class 2 NIC. You will however have the option to pay Class 2 NIC voluntarily at the end of the tax year. Married women could apply for a reduced rate of contributions before A subsequent annulment of marriage, or divorce, immediately stops entitlement to paying reduced contributions.

If you are not sure whether or not you are entitled to pay at the reduced rate you can enquire on form CF9 married women or form CF9A widows to find out. The same forms are used to give up your right to pay reduced rate contributions.

But if you pay the maximum amount of Class 1 NIC on your employment income, you may not need to pay any more contributions. Your Class 2 NIC liability is automatically calculated as part of the Self Assessment process, provided that you either file online or your paper tax return is submitted by the due date normally 31 October, following the end of the tax year and if you are due to pay any Class 2 NIC it is included with the tax you are due to pay on 31 January following the end of the tax year to which it relates.

Your Class 4 NIC liability will be automatically calculated, provided that you either file online or your paper tax return is submitted by the due date normally 31 October, following the end of the tax year , as part of the Self Assessment process. You can find details of the benefits to which Class 2 gives entitlement in the tax basics section. Class 4 NIC do not count towards any state benefits.

You might want to protect your eligibility to certain state benefits. This is because eligibility for some state benefits relies on you having paid a certain amount of Class 2 NIC within a defined time.

The two benefits most likely to be affected are maternity allowance and in some specific circumstances, contributions based employment and support allowance ESA.

The state pension also depends on you having paid or been credited with sufficient NIC over your working life. You can read more about eligibility for the state pension in our pensioners section.

The two benefits most likely to be affected are maternity allowance and in some specific circumstances, contributions-based employment and support allowance ESA. Entitlement to maternity allowance is based on NIC paid in the 66 weeks before the baby is due. This period is known as the test period.

The standard rate for which you must be self-employed for 26 weeks in that test period and have paid Class 2 NIC for 13 of them; and. As an example, if your baby was due in August , then you would have had to pay sufficient contributions in the 66 weeks leading up to that date — broadly from May to August