NIM24101 - Class 4 NICs: Structure: Annual Class 4 NICs maximum pre 6 April 2003: Purpose of an annual maximum
Section 6 Social Security Contributions and Benefits Act 1992 (SSCBA)
Regulation 100 Social Security (contributions) Regulations 2001 (SI 2001 No.1004)
Guidance on the Class 4 NICs annual maximum for all tax years from 2003/2004 is provided at NIM24150 onwards.
The following guidance relates solely to tax years from 1975/1976 to 2002/2003.
NIM11001 (Class 1) NIM20001 (Class2) and NIM24030 (Class 4) provide guidance on the calculation methods used to determine a contributor’s liability for National Insurance contributions.
Primary legislation, at section 6(5) SSCBA 92, imposes a full contribution liability in respect of each employment held by a contributor. This means that without some form of limiting factor, a contributor who has more than one employed earner’s employment, or who is both employed and self-employed, would face a NICs liability on all of their earnings above the appropriate thresholds in each of their employments.
In other words, a contributor who is both employed and self-employed would be liable to pay Class 1 NICs in each employed earner’s employment held and Class 2 and 4 NICs as a self- employed person.
The annual maximum is the device that serves to limit the amount of National Insurance contributions payable by any contributor who holds more than one employment. The annual maximum does not apply to a contributor who is wholly self-employed or who holds only one employed earner’s employment.
Guidance on the pre 6 April 2003 maximum amount of NICs payable is provided as follows: