Self employed NIC

I'm budgeting a possible side line for myself and a friend. We both have full time jobs and are taxed via the PAYE system.

If we go ahead with our little venture what additional (if any) NIC do we have to pay? I know we pay income tax on our other earnings but what about the NIC?

I know theres the set limit (2?) a week and then an income based percentage - do we still need to pay this given that we are paying via PAYE on our salaries?

Thanks

Reply to
Neil
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I'm not sure about this, but if your employment income exceeds the LEL (of £82 a week) you might not need to pay the £2 a week (actually £2.10 now) class 2 contributions. [If I'm right, that raises the question of whether in fact you're still required to register as self-employed.]

But yes you will certainly need to pay class 4 contributions if your self-employed (or share of partnership) profits exceed £4895 in the tax year 2005/6. You pay 8% of this excess, but if profits exceed £32760, then the excess above that is only taxed at 1%.

Just as there is a limit on class 1 NI from all employments, there may also be a personal NI ceiling on the sum of (the meaty part) of C1+C4.

Reply to
Ronald Raygun

There is an upper limit of the total NI paid when multiple employment/self employment is involved. If the total Class 1, Class 2 and Class 4 exceeds a certain figure, Class 4 can be rebated.

DF

Reply to
David Floyd

Well, ever since the introduction of the top 1% rate there is no longer *any* upper limit, but we know what you mean.

You didn't clarify the bit I wasn't sure about. Are you saying class 2 is still payable even if class 1 is paid, or deemed paid by virtue of (at least one of) the employed income(s) exceeding the LEL?

Reply to
Ronald Raygun

Class 2 is always payable if one is Self Employed and exception has not been claimed, and a man is below 65 and a woman below 60 (until 5/4/10).

If at the end of the year the total of Class 1, Class 2 and Class 4 exceeds a certain limit (and there is an upper limit which has to be calculated in view of the 1% rate), then a rebate is due, in the order Class 4, Class 2, Class 1 (non contracted-out), Class 1 (contracted-out)

Reply to
David Floyd

Since the introduction of the additional 1% rate for Class 1 and Class

4 contributions there are complicated calculations required.

If there is more than one employment then too much Class 1 can be paid. If there is is employment income and self-employment then the total of Class 1, Class 2 and Class 4 may be excessive. If most income is from employment but there is also self-employment then Class 2 may not be due.

Reply to
Peter Saxton

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