Class 4 National Insurance
National Insurance paid by self-employed individuals on their taxable profits, calculated as part of their Self Assessment tax return. The rate is 6% on profits between the Lower Profits Limit (£12,570) and the Upper Profits Limit (£50,270), and 2% on profits above that. Class 4 NI does not directly count towards contributory benefits in the same way as Class 1 NI.
Related Terms
National Insurance
A system of compulsory contributions paid by employees, employers, and the self-employed that funds state benefits including the State Pension, Statutory Sick Pay, and Maternity Pay.
Class 1 National Insurance
National Insurance contributions paid by employees and employers on earnings above the Primary Threshold.
Class 2 National Insurance
A flat-rate National Insurance contribution historically paid by self-employed people to build entitlement to the State Pension and other contributory benefits.
Self Assessment
The system by which individuals report their own income, gains, and reliefs to HMRC each year through an online or paper tax return, rather than having tax collected automatically under PAYE.
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