ACCA ATX ^UK Syllabus A1. Income tax - Class 4 NIC - Notes ^{3 / 4}

Contributions for the self employed

Class 4 NIC is payable by the self employed on behalf of their earnings

The rates of Class 4 NIC are 6% and 2%.

The rate of 0% is paid on profits below £12,570.
 The rate of 6% is paid on profits between £12,571-£50,270
 The rate of 2% is paid on all profits over £50,270

NIC	Paid by	Paid on behalf of	Limits	Rates
Class 4	Self employed	Self employed cash earnings	£0-£12,570 £12,571-£50,270 £50,271 -onwards	0% 6%   2%

Illustration

Calculate the NIC payable by Shobha if she is self-employed in 24/25 and has self-employed income of £57,000.

Solution
Class 4 NIC payable:
 £12,570 * 0% = £0 
£50,270-£12,570 = £37,700 * 6 % = £2,262
£57,000 - £50,270 = £6,730 * 2% = £135
Total Class 4 NIC payable = £2,397