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Where Taxpayers and Advisers Meet

NIC: Where self-employment ends mid tax year

CashingOut
Posts:10
Joined:Sat Feb 25, 2017 2:49 pm
NIC: Where self-employment ends mid tax year

Postby CashingOut » Mon Mar 20, 2017 3:07 pm

I was self-employed up to 31 Jan 2017 when I incorporated my business.
My accounting year is the same as the tax year.
My self-employed earnings were about £25,000 for the 10 months in tax year 2016/17. I will receive no renumeration at all from the new company for 2016/17.
Am I right in thinking I will pay Class 2 NIC of £2.80 for circa 43 weeks and 9% Class 4 on my earnings above £8.060?
I don’t know if the £8,060 is pro-rated down for less than a year of self-employment.
Also, will I have a full NIC Qualifying Year for 2016/17, or will there be a shortfall to make up via Class 3 voluntary contributions?
Thanks for your help.

RMC
Posts:435
Joined:Wed Aug 06, 2008 3:35 pm

Re: NIC: Where self-employment ends mid tax year

Postby RMC » Fri Mar 24, 2017 5:20 pm

You will pay, will your tax bill for 2016/17, Class 2 NIC for 38 or 39 weeks.
And Class 6 on about 8060 x 39 / 52.
You do not have to make voluntary Class 3 contributions as they are voluntary.
You will need at least 35 years’ full NIC contributions to qualify for 100% of the new flat rate state pension. Older people with decent Class 1 NIC record (check your personal tax account) will be better off on pension calculated under the old rules.
If your company pays you before 5.4.2017 salary of 122 x (52-38) = 1708, this will come with free Class 1 NIC. Engage an accountant for that. Will cost you £341.60 in tax but may save you some dividend tax in 2017/18.


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