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1.
HOW CAN I TELL WHETHER I AM EMPLOYED OR SELF-EMPLOYED?
This
is not always clear cut. The
answer depends on a number of factors, for instance, whether someone can
tell you what you do and how and when you do it?
For more detailed guidance, see the useful leaflet IR 56/NI39
from any Tax Office or Social Security Office.
2.
WHOM DO I NEED TO TELL?
As
soon as you start a business you should fill in form CWF1 (which you
will find at the back of leaflet CWL1) and send it to the Inland Revenue
National Insurance Contributions Office at Newcastle.
They will copy it to your Tax Office.
You should also tell the Jobcentre if you are registered with
one.
3.
HOW MUCH NATIONAL INSURANCE DO I HAVE TO PAY AS A SELF-EMPLOYED PERSON?
The
"Class 2" contribution for the tax year 2004/2005 is a flat
rate of £2.05 a week. In
addition you may have to pay a "Class 4" contribution of 8% of
your net profits between £4,745 and £31,720 (1% above £31,720 per
year)
4.
HOW DO I PAY?
Register online to pay Class 2 contributions by direct debit at the
Inland Revenue website (PDF).
You
pay any Class 4 contributions to the Inland Revenue, together with your
Schedule D tax.
5.
SUPPOSE I'M NOT EARNING MUCH?
If you expect your
net earnings from self-employment to be less than £4,215 per year in the tax year 2004/2005, you can apply for
"small earnings exception" by completing form CF 10 at the
back of leaflet CA 02.
You may then be excused from paying contributions for the rest of
that tax year.
WARNING
If you stop paying contributions, you may find you are no longer
entitled to benefits and your Retirement Pension may be reduced.
6.
WHAT BENEFITS AM I ENTITLED TO IF I PAY CLASS 2 CONTRIBUTIONS?
Incapacity
Benefit, Retirement Pension, Widow's Benefit and Maternity Allowance but
NOT Contribution-based Jobseeker's Allowance.
7.
WHAT ABOUT MARRIED WOMEN OR WIDOWS WITH A REDUCED LIABILITY CERTIFICATE?
You
do not have to pay Class 2 contributions (and therefore will not qualify
for benefits) but you will have to pay Class 4 contributions of 8% on
your profits between £4,745 and £31,720 in 2004/2005 (1%
above £31,720 per year).
8.
WHAT ABOUT MEN OVER 60?
If
you are over 60 or will reach 60 during this tax year and your earnings
from self-employment are low, claim "Exception" as in
paragraph 4 above. If
successful you will be awarded automatic credits to protect your right
to a Pension and other benefits.
9.
HOW CAN I FIND OUT MORE?
www.inlandrevenue.gov.uk/rates/nic.htm
www.businesslink.gov.uk
10.
IF IN DIFFICULTY:
Telephone Newly Self
Employed Helpline 0845 915 4515
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