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Where Taxpayers and Advisers Meet

NI payments on secondary freelance income

MarkR
Posts: 1
Joined: Wed Aug 06, 2008 3:07 pm

Postby MarkR » Wed Dec 10, 2003 3:10 pm

I am currently a full time employee earning £30,000 per annum. I am intending to do some extra freelance work. i expect to earn approx £6000 extra through this freelance work. I will need to register as self-employed and do self assessment and pay income tax (22%).

My question regards NI. As i am already paying NI on my current salary, will I need to pay NI on the £6000 extra. On the Inland Revenue form it says you have to pay class 2 up to £4615 and class 4 up to £30,420.

As i already have a salary of £30,000, do i only need to pay class 4 NI on the outstanding £420 of the £6000 extra i will earn? Or is the extra £6,000 counted as a completely seperate income, in which case i have to pay class 2 up to £4615 and class 8 on the remaining £1385?

thankyou

TSL
Posts: 60
Joined: Wed Aug 06, 2008 3:25 pm

Postby TSL » Thu Dec 11, 2003 12:16 am

Mark

Self-employed individuals are potentially liable to class 2 and 4 National Insurance on their taxable profits. If your taxable profit is £6000 you will be liable to both, subject to an overriding maximum for the year, which will take into account the class 1 National Insurance contributions paid on your salary.

The £30,420 upper earnings limit referred to in your query is the 2002/03 tax year rate which is not applicable to you, as you state that you have not started your freelance work yet and therefore, you will need to look at the 2003/04 level.

It would seem that you are very confused by what the Inland Revenue National booklet is saying. In addition to this there is the added complications of allowable self-employed expenditure etc and the filing of an annual self-assessment tax return.

I would suggest you seek professional assistance from the outset. This is likely to prove very beneficial and should not be too expensive given the levels of your expected earnings.

Taxation Solutions Limited
Tel:0800 027 4533

jp
Posts: 5
Joined: Wed Aug 06, 2008 3:06 pm

Postby jp » Mon Oct 04, 2004 12:47 pm

Jase,
I am in a similar position to Mark, in that I am a higher rate tax payer through full time employment, and also have just started earning approx 10K extra through freelance self employed work. Can I just clarify your comments that there is an overriding max NI payment for each tax year, which will mean that there are no further NI payments for me to make on my freelance earnings?
Cheers, jp


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