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HMRC internal manual

National Insurance Manual

Class 4 NICs: structure from 6 April 2003: general

National Insurance Contributions Act 2002

Income Tax (Trading and Other Income) Act 2005 (ITTOIA)

Major changes were made to the structure of Class 4 NICs from 6 April 2003.

These changes were put into effect by the National Insurance Contributions Act 2002, together with various supporting regulations.

Guidance on these changes can be found at NIM24033 onwards.

The changes affect the amount of Class 4 NICs payable by self-employed earners or earners whose profits or gains are chargeable to income tax under Chapter 2 of Part 2 of ITTOIA, (formerly Case I or II of Schedule D of the Income and Corporation Taxes Act 1988). The change do not disturb any of the existing Class 4 NICs rules covering:

  • the date upon which Class 4 NICs are due
  • the method used to assess Class 4 NICs liability - a percentage based system
  • the starting point at which liability for Class 4 NICs arises or
  • the year of assessment, which remains the income tax year for which tax under ITTOIA is payable.

Guidance on:

  • those areas of Class 4 NICs liability which are not affected by the changes and
  • the structure of Class 4 NICs before 6 April 2003

can be found at NIM24001 onwards.