The decision maker should calculate a notional Class 4
contribution
1) according to the chargeable income
and
2) at the percentage rate and within the specified levels for
the tax year in which the claim is made (Appendix 2).
Note The band width will have to be reduced on a pro rata
basis if the assessment period is less than a year.
Date of application falls in 1998/99 tax year, chargeable income
is £5,000 and the Class 4 contribution rate is 6% of profits
exceeding £7,310 but not exceeding £25,220.
The assessment period is six months from 1.6.98 to 30.11.98 =
183 days.
The Class 4 band-width, on pro rata basis, is
lower level (£7,310 x 183 ÷ 365) = £3,665.01
(rounded down)
higher level (£25,220 x 183 ÷ 365) =
£12,644.54
Chargeable income £5,000.00
Less Class 4 lower level (pro rata) £3,665.01
Profit for Class 4 calculation £1,334.99
The notional Class 4 deduction is 6% of the profit =
£80.10 (rounded up).
