Self employed how do i pay my national insurance

For example, you could be employed in one job and at the same time be registered as self-employed in a different job. For instant money guidance based on your circumstances, get started with our Money Navigator tool. The very latest you can register with HMRC is by 5 October after the end of the tax year during which you became self-employed.

The tax year runs from 6 April one year to 5 April the next. If you register too late, you might need to pay a penalty. UK website. Find out more about what you should do on the GOV. Your personal allowance is how much you can earn before you start paying Income Tax. The easiest way to find this out is to look at the tax code. Your main job should have the tax code L for the tax year.

Your secondary job will have the tax code BR, D0 or D1. To work out your trading profits, simply deduct your business expenses from your total income. You only pay the rate of Income Tax on your trading profits in the bracket. National Insurance contributions pay for certain benefits, including the State Pension and Universal Credit. You need to pay this by 31 January for the —21 tax year.

Are you running a private limited company Ltd or limited liability partnership LLP? You might also have to submit a Self Assessment tax return for any money you earn through the company. MoneyHelper is the new, easy way to get clear, free, impartial help for all your money and pension choices. Whatever your circumstances or plans, move forward with MoneyHelper. Download app: WhatsApp. For help sorting out your debts or credit questions.

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This guide gives you step-by-step advice to working out your National Insurance bill if you're self-employed. National Insurance contributions are paid by employees, employers and self-employed people until they reach state pension age. While those on a payroll system will have their contributions taken automatically, self-employed people need to organise their own National Insurance payments through their self-assessment tax return.

If you're self-employed, there are three types of National Insurance contribution you may have to pay. These are based on how much profit you make in a year, and are split into classes. Those in self-employment will either be: Class 2, Class 3 or Class 4. Most people will end up paying Class 2 and Class 4 contributions — a lesser rate on profits exceeding the lowest threshold, and a higher rate on profits that go into the Class 4 boundary.

If you earn below the threshold for Class 2 contributions, you do not need to pay any National Insurance due to having low earnings. However, you might want to consider making Class 3 voluntary contributions, as gaps in payments could affect your state pension and other benefits. We explain more on Class 3 contributions later on. From you will pay Class 4 National Insurance contributions at Use our National Insurance calculator to discover how much you'll pay in each tax year - simply select the tax year you want from the dropdown list.

We've assumed that self-employed people have elected to pay Class 2 National Insurance contributions. The figures shown indicate what you'd owe on an annual basis, assuming you've worked for the full tax year. Even if you earn below the Class 2 threshold, you may choose to make these contributions anyway at the same rate. Alternatively, you may choose to make voluntary Class 3 contributions, though the rate tends to be higher and you may not qualify for certain benefits.

You can find out more in our guide to Class 3 contributions. HMRC recommends that you pay your Class 2 National Insurance contributions electronically using 1 of the methods covered in this guide. Electronic payments are more efficient and secure than sending payment by post. If you are paying by post and you don't have a payslip you should send these details to HMRC with your payment:.

You should use the contact details described in the Paying by post section of this guide. If your payment is overdue HMRC will send you a letter to remind you. Make sure you pay the overdue amount immediately.

If you cannot pay the full amount you should contact HMRC straight away. You'll find the contact details on the letter. How you pay an overdue amount is the same as your usual Class 2 National Insurance payments except:.

Find out what you can do if you have a problem making a payment. How to pay self-employed Class 2 National Insurance This guide gives you the payment deadlines for paying Class 2 National Insurance contributions and tells you about your payment options. HMRC collects the payment automatically from your bank or building society either: each month 4 months in arrears 6 monthly in January and July HMRC recommends that you pay by Direct Debit because: it's safe and secure unlike with other ways of paying, you are protected by the Direct Debit Guarantee it puts you in control, making it less likely you'll miss a payment Direct Debit provides certainty about when your payment will reach HMRC it avoids the need to write cheques - and saves postage if you normally pay by post Find out about the Direct Debit Guarantee PDF 49K Setting up Direct Debit To set up payment by Direct Debit you need to complete a Direct Debit Instruction DDI and return it to HMRC - don't forget to sign and date your instruction.

You can download a DDI using the link below. HMRC won't collect any other amounts in this way. Find out the National Insurance Self-Employed Helpline opening hours Top Paying at your bank by Bank Giro If your bank or building society offers the Bank Giro service you can make a payment at your own bank branch by cheque or cash.

Top By post HMRC recommends that you make your self employed Class 2 National Insurance contribution electronically using one of the methods covered in this guide.

Entitlement to maternity allowance is based on NIC paid in the 66 weeks before the baby is due. This period is known as the test period.

The standard rate for which you must be self-employed for 26 weeks in that test period and have paid Class 2 NIC for 13 of them; and. As an example, if your baby was due in August , then you would have had to pay sufficient contributions in the 66 weeks leading up to that date — broadly from May to August Although the Class 2 contributions are not due until 31 January , you can choose to pay them early.

Paying early contributions may mean you will have paid enough to receive standard rate of maternity allowance. If you have not paid your contributions early or have not paid enough, when you make the claim for maternity allowance, you will be given the opportunity to make a lump sum payment of Class 2 contributions to enable you to claim the standard rate maternity allowance if appropriate — HMRC will work out how many weeks contributions need to be paid and then issue a bill for this amount.

ESA is paid to people who are unable to work due to illness. Normally, in order to be paid ESA in the current benefit year which runs from January to December you must have paid the following National Insurance contributions:.

In addition, you must have paid or been credited with 50 weekly contributions for both of those tax years. In reality this issue is only likely to affect you if you claim ESA between the first Sunday in January and 31 January in a year because only at that time are you unlikely to have paid the contributions necessary.

You should note that there are some exceptions to the above contributions conditions for ESA but the information here covers most situations. Skip to main content. What National Insurance do I pay if I am self-employed? Updated on 28 July What National Insurance do I pay on self-employed income? What is self-employed income for Class 2 NIC purposes?

How do I know how much to pay? Class 2 Class 4 How much do you pay? Is there a minimum level of profits before you pay NIC? Is there a maximum level of profits when you stop paying NIC? When is it paid?

How do you pay it? What is the Small Profits Threshold? How do I know if I am entitled to pay reduced rate contributions? I am employed and self-employed. What state benefits does payment of Class 2 NIC entitle me to? How does the payment of Class 2 NIC affect entitlement to maternity allowance? There are two levels of maternity allowance: 1. The standard rate for which you must be self-employed for 26 weeks in that test period and have paid Class 2 NIC for 13 of them; and 2.

Normally, in order to be paid ESA in the current benefit year which runs from January to December you must have paid the following National Insurance contributions: In one of the previous two complete tax years before the benefits year, you must have paid 26 weekly contributions; AND In both of those two previous complete tax years, you must have paid or been credited with 50 weekly contributions.

It is important that you pay your NIC early so that your claim is not delayed, if you need to. Where can I find more information? What income is taxable?