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HMRC internal manual

National Insurance Manual

Class 4 NICs: Structure from 6 April 2003: Calculation of Class 4 NICs for tax years from 6 April 2003 onwards

From 6 April 2003, Class 4 NICs are payable on all profits above therelevant year’s Lower Profits Limit (LPL):

The amount of Class 4 NICs due is the aggregate of the:

  • main Class 4 NICs percentage on so much of the profits as exceeds the LPL but does not exceed the Upper Profits Limit (UPL) and
  • additional Class 4 NICs percentage on all profits above the UPL.

There is no limit on the amount of additional Class 4 NICs payable. The amount of thisuncapped liability is determined only by the amount of profits in excess of the UPL. Thegreater the profits, the greater the amount of Class 4 NICs that will be due but see NIM24150 where a contributor is both employed and self-employedand subject to an annual maximum of contribution liability

The Class 4 NICs rates and limits for all tax years from 2003/2004 are provided at NIM24050

Examples of the Class 4 NICs calculations from 6 April 2003 are given at NIM24051