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HMRC internal manual

National Insurance Manual

Class 4 NICs: Structure: Annual Class 4 NICs maximum from 6 April 2003: Contributors who are self- employed only: Calculation method.

NIM24152 explains that there is no prescribed annual maximum of Class 2 and 4 NICsliability for a person who is self-employed only.

To calculate the amount of Class 2 and 4 NICs payable by someone who has no otheremployments the following method can be used.

Step 1

Multiply the amount of profits between the Lower Profits Limit and the Upper Profits Limitby the main Class 4 NICs percentage rate

Step 2

Multiply the amount of profits that exceed the Upper Profits Limit by the additional Class4 NICs percentage rate.

Step 3

Multiply the relevant Class 2 NICs rate by the number of weeks of self-employment in thetax year

Step 4

Add together the results of steps 1, 2 and 3.

The result of step 4 is the amount of Class 2 and Class 4 NICs payable by a contributorwho is self-employed only.

Examples of the calculation can be found at NIM24160.