why do i have to pay C4 NIC ?

[fenwick458]

i've done self assessment online but not submitted it yet, i'm confused as to why i'm having to pay class 4 NIC's. why is the total income on which tax is charged and the total income on which C4 is paid both different??

heres a screenshot of the tax calculation (copy and paste the link below. i would image tag it but the forum doesn't allow )

http://i204.photobucket.com/albums/bb18/fenwick458/jasontaxreturn.jpg

it's most likely right, i just want to know why.

[Tax Champion]

The calculation is correct.
As a self employed person National insurance is collected via class 4 and class2. Class 4 is paid with your self assessment tax, Class 2 is paid on a weekly basis currently £2.50 per week although not collected weekly.
The threshold at which you start to pay Class 4 national insurance for 2010-11 is different to your tax. Your profits can be £5,715 before you start to pay Cl 4. Therefore your calculation is profit £11,442 - £5,715 = £5,727 at 8% = £458.16.
For tax however you have a personal allowance of £6,475 before you start to pay tax.

For 2011-12 the government have brought the amounts before you start to pay tax and Cl 4 closer, £7,475 being your personal allowance for tax and £7,225 being the threshold for Cl 4.

Hope this helps.

[fenwick458]

thanks, that clears things up

[mullet]

Class 4 NIC is simply another form of tax, and to an extent equalises the overall tax/NIC rate between employed and self employed workers.

[JRG]

Tax Champion:

You forgot to add that Class 4 NICs rate for 2011/12 is increased to 9%.