How do I limit the rate of Class 4 NIC charged to 2%?
You can reduce Class 4 NIC liability so that the excess earnings are charged at 2% if one of the following is true:
- You pay Class 1 NIC on employment income.
- You pay Class 2 NIC at the weekly flat rate.
- The amount of Class 4 NIC chargeable at 9% would exceed the limiting amount.
To reduce the Class 4 NIC liability if eligible, follow these steps.
SimpleStep Mode
- Navigate to Working out your tax > Class 2 & Class 4 NIC's maximum charge
- Fill in the following boxes:
- Total (Employment)
- Column F Total
Please note column D is from your P60
HMRC Forms Mode
- Navigate to Self-Employment > Self Employment Full/Short > Page 5/ Page 2.
- Click on the wizard icon on box 100/box 36.
- Fill in the following boxes:
- Total (Employment)
- Column F Total
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Example
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Employment income
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£50,000
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Partnership income
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£20,000
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Class 1 NIC deducted at source
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Earnings up to upper limit (A x B = C)
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£4,192.80
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Earnings over limit (D x E = F)
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£330.20
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£4523.00
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Class 4 NIC entered in box 4 (Tax Calculation pages)
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Earnings over threshold ((20,000 – G) x H = I)
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£238.80
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A
The following tables show rates and allowances for previous years.
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Tax year
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Earnings up to upper limit (*A)
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Percentage charged (B)
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Class 1 NIC payable at initial charge (C)
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Earnings above upper limit (D)
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Percentage charged (E)
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Class 1 NIC payable at additional charge (F)
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Lower limit (G)
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Chargeable rate (H)
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Class 4 NIC Due (I)
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2016–17
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£34,940
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12%
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£4,192.80
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£15,060
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2%
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£342.20
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£8,060
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2%
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£238.80
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2015–16
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£34,325
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12%
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£4,119.00
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£15,675
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2%
|
£330.20
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£8,060
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2%
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£238.80
|
|
2014–15
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£33,909
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12%
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£4,069.08
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£16,091
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2%
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£321.82
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£7,956
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2%
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£240.88
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2013–14
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£33,695
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12%
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£4,043.40
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£16,305
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2%
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£326.10
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£7,755
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2%
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£244.90
|
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2012–13
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£34,870
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12%
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£4,184.40
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£15,130
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2%
|
£302.60
|
£7,605
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2%
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£247.90
|
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2011–12
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£35,250
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12%
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£4,230.00
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£14,750
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2%
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£295.00
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£7,225
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2%
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£255.50
|
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2010–11
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£38,160
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11%
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£4,197.60
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£11,840
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1%
|
£118.40
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£5,715
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1%
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£142.85
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2009–10
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£38,160
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11%
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£4,197.60
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£11,840
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1%
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£118.40
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£5,715
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1%
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£142.85
|
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2008–09
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£34,605
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11%
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£3,806.55
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£15,395
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1%
|
£153.95
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£5,432
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1%
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£145.68
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2007–08
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£29,615
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11%
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£3,257.65
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£20,385
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1%
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£203.85
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£5,225
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1%
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£147.75
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2006–07
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£28,505
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11%
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£3,135.55
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£21,495
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1%
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£214.95
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£5,035
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1%
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£149.65
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2005–06
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£27,865
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11%
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£3,065.15
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£22,135
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1%
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£221.35
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£4,895
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1%
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£151.05
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2004–05
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£26,975
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11%
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£2,967.25
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£23,025
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1%
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£230.25
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£4,745
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1%
|
£152.55
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A
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* How "A" is calculated (Earnings up to upper limit)
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Tax year
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Upper profit limit
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Lower profit limit
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Difference (A)
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2016-17
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£43,000
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£8,060
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£34,940
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|
2015/16
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£42,385
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£8,060
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£34,325
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|
2014/15
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£41,865
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£7,956
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£33,909
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|
2013/14
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£41,450
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£7,755
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£33,695
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2012/13
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£42,475
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£7,605
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£34,870
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2011/12
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£42,475
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£7,225
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£35,250
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2010/11
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£43,875
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£5,715
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£38,160
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2009/10
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£43,875
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£5,715
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£38,160
|
|
2008/09
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£40,040
|
£5,435
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£34,605
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|
2007/08
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£34,840
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£5,225
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£29,615
|
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2006/07
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£33,540
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£5,035
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£28,505
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2005/06
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£32,760
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£4,895
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£27,865
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|
2004/05
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£31,720
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£4,745
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£26,975
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Deferring Class 4 NIC
From 2015/16 onward, you are no longer able to defer Class 4 NIC. For additional information on this, please see How to defer class 4 NIC?
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