When preparing yourself to embark into the world of self employment, remember to take into account the Class 4 National Insurance Contributions.
Not quite familiar with their definition? Don’t get scared, keep on reading.
Dealing with national Insurance isn’t so bad
Your life will change a lot as a result of becoming self employed. You will no longer have paid days off, health insurance, financial benefits or brand recognition.
You will have to do all these things for your own and even do three jobs at once if you can’t afford to hire staff.
Insurance for Class 4 National Insurance Contributions is another task that you have to take care of. We can make it all easy for you.
Luckily, nowadays the process is relatively easy and there is plenty of guidance available from our staff.
When you file your tax return, your class 4 National Insurance contributions will be worked out for you automatically.
There are also various calculators you can use to work out how much you owe. If you earn below a certain amount you might be exempt from this tax altogether.
As usual, our friendly staff will help you with any and all the queries you might have on how to become self employed and how to sort out your tax contributions, as well.
What are Class 4 National Insurance contributions?
There are four classes of contributions that have to be paid depending on your situation.
Class 4 NICs is taxed according to the profits registered at the end of the year over a certain amount. This only applies to self employed people and are paid on top of Class 2 NICs (paid exclusively by self employed workers).
You might be wondering how much you have to pay with Class 4 NICs. You pay 9 per cent on annual profits between £7,755 and £41,450 (2013-14) and 2 per cent on any profit over that amount.
Exceptions from the Class 4 National Insurance contributions
Believe it or not, there are exceptions from the rule in the case of the people who have to pay Class 4 National Insurance contributions:
- those who are under 16 years old
- those who are not residents of the country for tax purposes
- those who are still working in the tax year after reaching State Pension.
In the case of the latter category, we are talking about the ones that are still working and are over the State Pension age when the tax year begins (the year related to the Self Assessment tax).
That’s a tricky business, but you can still take advantage of the benefits offered by the state if you fall into one of these categories.
Enjoy the self employed experience!
Every business requires serious work in order to prosper and develop. If you are working for yourself, try to look on the bright side of the story and enjoy every moment of it.
Yes, sometimes it might be hard, but the positive results will soon replace every stressful day and tiring experience.
All you need to do is remember that you have started a successful business and you are ready to see some progress.
We’re here to help
Don’t be dissappointed if dealing with national insurance contributions is not right up your alley.
Our friendly, expert staff are here to help and, as usual, they will explain all the steps of the process. They will also make sure that all your self employment queries and needs are well taken care of.
So get in touch with us today to make the most of your self employed life!
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