My client has both employment and self-employment/partnership income, how do I limit the rate of Class 4 NICs charged to 1%?.

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My client has both employment and self-employment/partnership income, how do I limit the rate of Class 4 NICs charged to 1%?.

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If, where an individual is liable to pay both Class 1 (and/or Class 2) and Class 4 NICs: • the Class1/Class 2 contributions charged at the main primary percentage, PLUS • the amount of Class 4 contributions chargeable at 8%, exceeds the limiting amount (£2,485.80 for 2007/08) then the Class 4 NIC liability may be reduced and the excess earnings should be charged at 1%. If this situation occurs, deferment should be requested from the National Insurance Contributions Office. Once deferment has been agreed, tick the appropriate: • box 34 (Self employment pages – Short) • box 99 (Self employment pages – Full) or • box 24 (Partnership pages) and TaxCalc will automatically calculate the Class 4 NICs at 1% of the taxable profit over the earnings threshold (£5,225 for 2007/08).

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A. Where an individual is liable to pay both Class 1 (and/or Class 2) and Class 4 NICs; if the Class1/Class 2 contributions charged at the main primary percentage, PLUS the amount of Class 4 contributions chargeable at 8%, exceed the limiting amount (£2,391.70 for 2006/07), the Class 4 NIC liability may be reduced and the excess earnings should be charged at 1%. If this situation occurs, deferment should be requested from the National Insurance Contributions Office. Once deferment has been agreed, tick box 3.95 (Self employment pages) or box 4.24 (Partnership pages) and TaxCalc will automatically calculate the Class 4 NICs at 1% of the taxable profit over the earnings threshold (£5,035 for 2006/07).

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