National Insurance For Self Employed Explained
The class 2 national insurance contribution is a fixed amount of 3 05 a week and it s only charged if your annual profits are 6 475 or more.
National insurance for self employed explained. In this video i m explaining. It s important to stay on top of all your records in order to work out how much you need to pay. National insurance unlike income tax is only payable by people who aged 16 years or over and are below the state pension retirement age. If you re self employed you might have to pay class 2 and maybe even class 4 national insurance.
When you re self employed you re responsible for paying tax and national insurance on your income. Self employed national insurance rates. Class 2 nics are a fixed amount of 3 00 per week 2019 20 assuming the contractor s profits are over the threshold of 6 365 2019 20. Our advisers will point you in the right direction.
These are currently the same as for england and northern ireland for the 2020 21 tax year. You usually pay 2 types of national insurance if you re self employed. Do i need to pay national insurance. Class 4 if your profits are 9 501 or more a year.
Class 2 if your profits are 6 475 or more a year. For the 2020 21 tax year employees must pay national insurance is they earn more than 9 500 in the year. Class 4 national insurance contributions are only charged if your profits are above 9 500 a year the rate is nine per cent of profits between 9 501. The amount due is based on the number of weeks the contractor is self employed in the tax year.
If you re self employed the self employed ready reckoner tool can help you budget for your tax bill. It s normally collected through self assessment as part of your tax return. For example if their self employment starts on the 1 st of february they ll. Self employed people who are sole traders pay national insurance based on how much profit they make from their business.
This guide explains the rates for the 2019 20 tax year why you might want to make voluntary class 3 contributions and how national insurance contributions are linked to the state pension. From 6 april 2019 income tax rates will be set by the welsh government. Start a webchat online or call us on 0800 138. National insurance or ni is one of those taxes that self employed folk often forget about.
Self employed workers will pay class 2 contributions if they earn more than 6 475 in addition to class 4 if they earn more than 9 500. Class 2 and class 4 nics are charged at different rates.
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