NI contributions

[sammiejoe]

hi everyone, Im reading up on tax and ni contributions, it is all going in ok apart from im confused at this bit:

If you're self-employed
If you're self-employed you pay Class 2 and Class 4 National Insurance contributions. The rates are:

• Class 2 National Insurance contributions are paid at a flat rate of £2.65 a week

• Class 4 National Insurance contributions are paid as a percentage of your annual taxable profits - 9 per cent on profits between £7,605 and £42,475, and a further 2 per cent on profits over that amount.

If your profits are expected to be less than £5,595 you may not have to pay Class 2 National Insurance contributions.

Your Class 2 National Insurance contributions payments are due on 31 January and 31 July, the same as a Self Assessment tax bill. You pay Class 2 National Insurance contributions either monthly or six monthly by Direct Debit – follow the first link below for more information about payment dates.

You pay Class 4 National Insurance contributions when you pay your Income Tax.

confused.com lol

You know what things just stop going in and u cant make heads or tails of it lol, layman's terms please ?

sammie xoxo

 

[Miss Pink23]

Basically, most people will pay class 2 Ni, but you only have to pay class 4 on profits over the specified amount.

 

[sammiejoe]

so if i earn over £7,605 in my first year that is?

sammie xoxo

 

[Miss Pink23]

If you earn £7,605+ PROFIT, then yes, 9% of the profit over £7,605 you will pay as class 4 ni
x

Also, when you fill in your self assessment online, it will work out your class 4 for you.

 

[sammiejoe]

thankyou

sammie xoxo