Maximum NIC

Maximum NIC

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I am using a software package to complete a Self Assessment form and believe that the software (and the form) might lead to an overpayment of class 4 NIC. A summary of the facts are:

Employed until 13 November 2006
Earned £33,768
Paid employee class 1 NIC £2,107.51

Self-employed from 14 November 2006
Tax adjusted profits £36,899
Paid class 2 NIC £44.10

Checking the arithmetic, I notice that the package merely performs the straightforward calculation that does not take into account the class 1 NIC paid (because the SA form does not ask for this, I presume):

(36,899-33,540)@1% = 33.59
(33,540-5,035)@8% = 2,280.40
Add the above = 2,313.99 Sterling is the class 4 NIC due.

I've heard that to find out the correct amount of NIC one must perform a devilishly complicated procedure. Can someone please tell me whether there is a shortcut or, failing that, recommend a calculator?

Thanks

Rupert

Replies (5)

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By Paula Sparrow
29th Jun 2007 13:02

I did say it was only a rough estimate......
You'll need to check what was actually paid at the 10% rate under Class 1 to be certain.

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By User deleted
29th Jun 2007 10:08

Many thanks
I would like to thank the Editor together with Shaun McGuiness, Peter Crowther and Paula Sparrow for helping me with this matter.

Paula's ball park figure gave me the added impetus to follow Peter's advice and phone the NIC Deferment Service. The person who took my call was very pleasant and helpful and will send me their form CA5610.

I have looked at the Tax Tips and Tools and will probably buy the next edition.

Again, many thanks.

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By User deleted
28th Jun 2007 10:52

NIC Deferment now for 2006-07!
Any Schedule D and E (excuse old terminology) cross-over of this type within a tax year should lead to a Class 4 postponement. Contact NIC Deferment services. They are a helpful lot. You can still defer 2006-07 Class 4 NIC. Oh yes, you can!! You still have to pay the class 2 to avoid a £100 penalty.

In a nutshell, the majority of the taxable profits will be NIC'ed at 1% only.

"If you wish to apply for a refund of Class 4 contributions, you need to get claim form CA5610 from Deferment Services at the same address or telephone:

084591 followed by:

55651 / 55006 / 55425 if the last two numbers of the NINO are 00 to 33

59703 / 55653 / 57227 if the last two numbers of the NINO are 34 to 66 or

59383 / 59463 / 55654 if the last two numbers of the NINO are 67 to 99

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By Paula Sparrow
28th Jun 2007 13:22

I agree with Peter
By my rough reckoning, the Class 4 due is about £350 (just slightly more than the 1% surcharge). This assumes that the Class 1 NI paid at standard rate is approximately £2,000. So your client is better off applying for deferment now, so that only the 1% charge is paid under Self Assessment.

I put together a spreadsheet which used to be 100% accurate before the 1% charge came in, but since the rules changed it doesn't work quite so well and I've never got to the bottom of why.

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By shaunmcguinness
28th Jun 2007 09:53

Max NIC calculator
its not that complicated but is a pain!
the 2020 tax tips and tools contain this and can be bought from 2020

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