NI contributions

[Im a BusyBee]

I thought ni as a self employed person was only a couple of pounds a week. But can someone tell me what this class 3 contribution is? class 2 is the usual one i believe?

[kempie]

If you're self-employed you pay 'Class 2' NICs at a flat rate weekly amount of �2.20 (there are also special Class 2 rates for share fishermen and for volunteer development workers).

You also pay 'Class 4' NICs as a percentage of your taxable profits - you pay eight per cent on annual taxable profits between �5,225 and �34,840 and one per cent on any taxable profit over that amount.

If your earnings in the 2007-2008 tax year are expected to be less than �4,635 then you may be entitled to the Small Earnings Exception (SEE), meaning you don't have to pay any Class 2 NICs.

http://www.direct.gov.uk/en/MoneyTaxAndBenefit s/Taxes/BeginnersGuideToTax/DG_4015904

[Black Noir]

Class 3 contributions are for UK residents working abroad who want to keep up their entitlement to UK benefits/state pension.

[kempie]

That is not a wholly accurate assessment of Class 3 NICs; they are a voluntary flat-rate contribution for those not employed nor self-employed and who are not entitled to NI credits.

[Black Noir]

I only ever dealt with overseas UK residents so just to clarify and not appear overly perdantic:

Class 3: If you are neither employed nor self-employed, or live overseas, then you are not required to pay NIC. If you still want to - to keep up your pension etc - then you can register for Class 3. These contributions cost �7.55 week.

[kempie]

�7.80 for 2007/8. ;-)

[Im a BusyBee]

just to explain why i ask my question: my son has been self employd until quite recently paying only class2 ni with no mention of anything more. my husband has just become self employed and he's been sent details of ni due to be paid by him and as well as the class 2 there is another column with much greater contributions listed - are these payments also due? if so are they necessary?