What does this mean for you?
Class 2 National Insurance
If you are self-employed and have profits over the Small Profit Threshold (£6,025 for 2017/18 and £6,205 for 2018/19), you will have to pay Class 2 National Insurance. The contribution is a flat rate of £2.85 per week for 2017/18 and £2.95 per week for 2018/19 and helps build your entitlement to a state pension and benefits such as; employment and support allowance (ESA) and Maternity Allowance.
If your profits are below this threshold you do not need to pay any class 2 National Insurance, but it is advisable to make voluntary contributions as you will need 35 qualifying years to get the full State Pension.
Class 4 National Insurance
If your taxable profits are above the lower Class 4 profit limit (£8,164 for 2017/18 and £8,424 for 2018/19) you will also have to pay Class 4 contributions of 9% on profits over this limit in addition to Class 2.
If profits are high (over £45,000 2017/18 or £46,350 in 2018-19) then the rate of Class 4 National Insurance falls to 2% on profits over this higher limit.
Self-Assessment Tax Return
Class 2 and Class 4 National Insurance is paid together with your income tax and must be reported on your Self-Assessment Tax Return. The tax is due by 31 January following the end of the tax year for example 2017/18 tax year ends 5 April 2018 income tax and NIC will have to be paid to HMRC by 31 January 2019 and 31 July 2019, depending on the level of tax due.
Do I need to register for Self-Assessment?
Do you have income from Self- Employment or Income from Letting out a property during the tax year ending 5 April 2018?
Have you registered with HMRC and notified them you need to file a Self-Assessment Tax Return?
If you haven't already done so, the deadline for registering for Self-Assessment is 5 October 2018.
Not sure how to register? Get in touch with us and we can help you register with HMRC for Self-Assessment.
Please contact Dawn
Email: firstname.lastname@example.org or Telephone 01969 624999