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HMRC internal manual

National Insurance Manual

Class 4 NICs: Structure: Annual Class 4 NICs maximum pre 6 April 2003: Contributors who are employed and self-employed: Calculation method

Regulation 100 (SSCR 2001)

NIM24102 explains that there is no prescribed annual maximum of Class 2 and 4 NICs for a person who is self-employed only. NIM24120 explains that contributors who are both employed and self-employed are restricted to a prescribed annual maximum of Class 4 NICs liability

To calculate the annual maximum of Class 1, 2 and 4 NICs payable by someone who has been both employed and self-employed in the same tax year the following method can be used.

Step 1

Multiplying the profits between the Lower Profits Limit and the Upper Profits Limit by the relevant Class 4 NICs main percentage.

Step 2

Add to the figure at step 1, 53 x the Class 2 rate for the tax year

Step 3

Deduct from step 2 the amount of Class 1 and 2 NICs paid by the contributor for the year

Step 4

If the result of step 3 is a negative figure, no Class 4 NICs are due

If the result of step 3 is a positive figure, that is the maximum amount of Class 4 NICs due

Examples of the calculation can be found at NIM24130.