»Ê¹ÚÌåÓýapp

Case 2 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 and the 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% (2.73% for the 2022 to 2023 tax year) in Class 4 NICs on all of their profits and gains. Depending upon the level of a contributor's profits and the amount of Class 1 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 2 of regulation 100(3) applies where the result of step 4 of regulation 100(3) is a positive value but it does not exceed 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 Class 4 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 2 of regulation 100(3) will be liable to pay a mixture of Class 4 NICs at the main and the additional percentages. »Ê¹ÚÌåÓýapp reason for this is that they will:

• have paid an amount of Class 1 and/or Class 2 NICs that is less than:

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

• have profits which exceed the amount needed to pay the amount of Class 4 NICs at the main Class 4 NICs percentage that step 4 of regulation 100(3) requires.

It is important to note that regulation 100 provides contributors who fall into Case 2 of regulation 100(3) with their exact maximum. This contrasts with contributors who fall into Case 1 of regulation 100(3) � see NIM24176. Where a contributor has paid more Class 4 NICs than regulation 100(3) requires, an excess refund will be due.

• NIM24182 - provides an example of a contributor who falls into Case 2 of regulation 100(3) but who is not required to pay additional rate Class 4 NICs because the profits do not exceed the UPL.
• NIM24183 - provides an example of a contributor who falls into Case 2 of regulation 100(3) and who is required to pay additional rate Class 4 NICs because the profits exceed the UPL

In both examples the contributor is, however, required to pay some Class 4 NICs at additional Class 4 NICs percentage because the amount of Class 1 and 2 NICs paid do not exceed:

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

From 6 April 2024

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