»Ê¹ÚÌåÓýapp

Case 1 of regulation 100(3) of the Social Security Contributions Regulations (SSCR) 2001 (SI 2001 No. 1004)

NIM24175 sets out the calculation method for determining the maximum amount of Class 4 NICs payable by a contributor who is both employed and self-employed and liable to pay Class 1, 2 and Class 4 NICs. Regulation 100(3) provides three cases for these contributors. »Ê¹ÚÌåÓýapp maximum calculations vary depending upon which case the contributor falls into.

»Ê¹ÚÌåÓýappse three cases are necessary because of the need to ensure that all contributors pay at least 2% in Class 4 NICs on all of their profits and gains. Depending upon the level of a contributor's profits and the amount of Class1 and 2 NICs paid, the maximum amount of Class 4 NICs due will vary. All contributors who are liable to pay both Class 1 and Class 4 NICs will be required to pay either:

• Class 4 NICs at the main Class 4 NICs percentage only
• a mixture of Class 4 NICs at the main Class 4 NICs percentage and the additional Class 4 NICs percentage
• Class 4 NICs at the additional Class 4 NICs percentage only.

Case 1 of regulation 100(3) applies where the result of step 4 of regulation 100(3) is a positive value and exceeds the aggregate of:

1. primary Class 1 NICs payable at the main percentage
2. Class 2 NICs and
3. Class 4 NICs payable at the main percentage

that the contributor would have paid if no maximum existed. To determine this it is necessary to work out the amount of Class 1, 2 and 4 NICs that the contributor would pay:

• on all of his earnings above the primary threshold in each of his employed earner's employments,
• on all of his profits above the LPL
• in Class 2 NICs.

Those contributors who fall into case 1 of regulation 100(3) will be liable to pay Class 4 NICs at the main Class 4 percentage only. »Ê¹ÚÌåÓýapp reason for this is that they will:

• have profits for the year which are less than the UPL and so no additional rate Class 4 NICs will be due and
• have paid an amount of Class 1 and/or Class 2 NICs that is less than:

• the main Class 4 percentage on profits between the UPL and LPL plus
• 53 Class 2 NICs

It is important to note that contributors who fall into Case 1 of regulation 100(3) may not be liable to pay the maximum figure calculated by regulation 100. »Ê¹ÚÌåÓýapp reason for this is that Case 1 of regulation 100(3) provides a maximum which is based on profits at the UPL.

Where a contributor has paid Class 1, 2 and 4 NICs but has paid less than the Class 4 NICs figure shown at step 4 of regulation 100(3) under Case 1, no further Class 4 NICs are due. In such cases the contributor will not have reached his maximum because he has insufficient profits.

• NIM24181 - provides an example of a contributor who falls into Case 1 of regulation 100(3) and who has not reached his maximum.

From 6 April 2024

»Ê¹ÚÌåÓýappre is no Class 2 element of the annual maximum calculation.