If you're self-employed and your annual profits are over a certain amount you normally have to pay Class 4 National Insurance contributions in addition to Class 2 contributions. This guide explains how much you pay and the circumstances when you may be exempt from paying. To find out about your wider tax and National Insurance responsibilities when you're self-employed, read the related guide 'Self-employed tax and National Insurance' - you'll find the link under 'Further information' at the end of the page.
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The amount of Class 4 National Insurance contributions you have to pay for any tax year is based on your profits for that year. You pay 9% on annual profits between £7,956 and £41,865 (2014 to 2015) and 2% on any profit over that amount.
You work out your Class 4 National Insurance contributions on your
Self Assessment tax return and pay them alongside your Income Tax. Class
4 National Insurance contributions don't count towards benefit entitlements.
If you have more than one business, special rules apply for calculating adjustments to profits on which you pay Class 4 National Insurance contributions.
If you file your return online, your Class 4 National Insurance contributions will be worked out for you automatically. If you send in a paper tax return by 31 October following the end of the tax year and leave the space blank, HM Revenue & Customs (HMRC) will work out your contributions. You can work out your Class 4 contributions yourself by using the Class 4 calculator in the notes that come with your tax return supplement.
You don't have to pay Class 4 National Insurance contributions if any of the following apply:
If you are under 16 you'll have to apply for an exemption by filling in form CA2835U. You can get the form by writing to:
HM Revenue & Customs
National Insurance Contributions & Employer Office
Benton Park View
Newcastle upon Tyne
Read the ‘RDR1 Residence, domicile and the remittance basis’ guidance notes to see if you are not resident in the UK for tax purposes.
You don't have to pay Class 4 National Insurance contributions if you are still working and over State Pension age at the start of the tax year to which your Self Assessment tax return relates. If your birthday falls on 6 April itself you are still exempt from paying. For example, if you are completing a tax return for the tax year 6 April 2014 to 5 April 2015, you will not have to pay Class 4 National Insurance contributions for any of that year if you reach State Pension age on 6 April 2014 or any date before then.
If you reach State Pension age during the tax year, you will have to pay Class 4 National Insurance contributions for the whole of the year.