National Insurance payment query

[GarrettMacD]

OK, here we go...

I have to have my self-assessment done by Jan 31st. I don't have an Accountant, it's too late to get one, and I will get one for next year... maybe!

So, about NI payments.

Every three months I get a demand to pay a certain amount of NI. It's usually about £30 and I just pay it at the Post Office. So, about £120 a year.
On my self-assessment form I am now being charged for Class 4 National Insurance payments, and the charge is considerably more, well over £1000 in fact.

So, why am I paying the £30 every three months aswell as the larger sum this year? There is no 'credit' shown for the payments I make at the Post Office, it's almost as if it's another type of N.I., which would not be a surprise.

Can anyone explain why I am having to make so many NI payments every year, and yet I only pay tax twice yearly (31 Jan and 31 July)

Truly Puzzled...

[Eric Mc]

For goodness sake get an accountant. It's a jungle out there and the tax man will eat you alive.

Regarding NI - as a self employed individual you are liable for two types of NI, Class 2 (which you pay monthly or quarterly) and Class 4, which you pay as part of your Self Assessment liability - usually on 31 January but also as part of the 31 July payment on account.

Class 4 is MUCH higher than Class 2. For 2004/05 it is calculated at 8% on your taxable income falling between £4,895 and £32,760 and an additional 1% on everything over £32,760.

[GarrettMacD]

Eric Mc said:

For goodness sake get an accountant. It's a jungle out there and the tax man will eat you alive.

Yes, I will Eric, I have one on hand for next year. But somehow I feel that if he can't reduce my tax liability to 'zero' then I'll be disappointed...

Thanks for the info on the different NI contribution schemes.

Garrett