NATIONAL Insurance Questions Answered

Q

How much is Self Employed National Insurance and how do I pay it?

The form to apply to pay NI contributions is in the booklet 'Thinking of Working for Yourself?', P/SE/1, available from your local Tax Office. By completing this form you are setting up a standing order on your bank account. Inland Revenue will then take £2.05 per week (for the current tax year 2004 / 2005) on a four or five week per month basis from your account. This is Class 2 NI contributions. You will also be liable to pay Class 4 NI contributions at the rate of 8% of your net profit between the threshold £4,745 - £31,720 and 1% for everything over that figure (for the current year 2004 / 2005 at the end of the trading year. You can download forms from this web site and even register on-line http://www.inlandrevenue.gov.uk/nic/

Q

I already work full time for an employer and I operate the business in my spare time - do I have to pay NI?

Not necessarily although you may have to pay NI based on your profits at the end of your trading year. However you should tick the box at the bottom right of the P/SE/1 that says deferment (if you are both employed and self employed) and in this way NI may not be taken.