This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

National Insurance Manual

Class 4 NICs: Structure: Annual Class 4 NICs maximum pre 6 April 2003: Purpose of an annual maximum

Guidance on the Class 4 NICs annual maximum for all tax years from 2003/2004 isprovided at NIM24150 onwards.

The following guidance relates solely to tax years from 1975/1976 to 2002/2003.

NIM11001 (Class 1) NIM20001 (Class2) and NIM24030 (Class 4) provide guidance on the calculationmethods used to determine a contributor’s liability for National Insurancecontributions.

Primary legislation, contained within SSCBA 92, imposes a full contribution liability inrespect of each employment held by a contributor. This means that without some form oflimiting factor, a contributor who has more than one employed earner’s employment, or whois both employed and self-employed, would face a NICs liability on all of their earningsabove the appropriate thresholds in each of their employments.

In other words, a contributor who is both employed and self-employed would be liable topay Class 1 NICs in each employed earner’s employment held and Class 2 and 4 NICs as aself- employed person.

The annual maximum is the device that serves to limit the amount of National Insurancecontributions payable by any contributor who holds more than one employment. The annualmaximum does not apply to a contributor who is wholly self-employed or who holds only oneemployed earner’s employment.

Guidance on the pre 6 April 2003 maximum amount of NICs payable is provided as follows:

  • NIM37010 - for contributors who are employed only
  • NIM24102 - for contributors who are self-employed only
  • NIM24120 - for contributors who are both employed and self-employed