Self Employed National Insurance Contributions

Dear All,

I have been informed that for ILR, self employed national insurance contributions, type-2 are mandatory.

In addition, if the profits are above 5,650 GBP, there will be additional type-4 NI Contribution at the rate of 8%-9% of profits up to 42,475 GBP, plus 2% on profits over 42,474.

I would appreciate, if someone could help me out understanding the requirements in terms of NI contributions, for Self Employed Person or confirm the above information. Do I need to pay two types of NI contributions as a self employed???

Regards,

nsm2010

One needs to pay Class 2 / 4 NI contributions to comply with tax regulations (not ILR). Not doing so may affect immigration applications.

Class 2 National Insurance contributions
Class 4 National Insurance contributions

That said, you haven't shared how you operate as self-employed. If as an employee (Director) of a limited company that you are a controlling shareholder of, then:
1. For immigration purposes, UKBA considers you self-employed.
2. For tax purposes, HMRC considers you employed (and not self-employed) and therefore you (employee) are not liable to pay Class 2 / 4 NI contributions.

Sorry to come across as a pedant but ...

In addition, if the profits are above 5,650 GBP, there will be additional type-4 NI Contribution at the rate of 8%-9% of profits up to 42,475 GBP, plus 2% on profits over 42,474.

The class 4 lower profits limit has now changed.

For those filling in a tax return for 2011-12 Class 4 NI payable is 9% between profits of £7,225 and £42,475 and 2% over this. For 2012-13 it will be 9% between profits of £7,605 and £42,475 and 2% over this.


From a tax point of view (not UKBA) small earnings exemptions are available on Class 2 NI (£5,315 and £5,595 for 2011-12 and 2012-13 respectively) but do read this in light of what nsm2010 says above. I personally don't know about the ILR and Class 2 contributions situation and am approaching it from a tax point of view.