How are National Insurance Contributions calculated for a sole trader?
As a sole trader, there are 2 types of national Insurance payable in your self-assessment tax return. There is Class 2 National Insurance and Class 4 National Insurance.
Class 2 National Insurance
Class 2 National Insurance is payable at a flat rate for each week you have been self-employed. If you are self-employed and earning below the small profits threshold per year, there is no requirement to pay class National Insurance. You may however choose to pay class 2 National Insurance Voluntarily to protect your eligibility to certain state benefits. The table below shows the weekly national insurance contributions rates and the small profits threshold.
Financial Year ending 5 April Weekly NICs small profits threshold
2018 £2.85 £6,025
2019 £2.95 £6,025
Class 4 National Insurance.
Class 4 National Insurance is payable based on your taxable self-employed profits. The table below shows rates for different bands.
Financial Year ending 5 April Profit Band Class 4 NIC
2018 Up to £8,164 nil
£8,164 up to £45,000 9%
Over £45,000 2%
2019 Up to £8,424 nil
£8,424 up to £46,350 9%
Over £46,350 2%
For more information about how your National Insurance has been calculated as a sole trader, please contact us.
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