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Case 3 of Regulation 100(3) of the Social Security (Contributions) Regulations 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 used 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. 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 3 of regulation 100(3) applies where the result of step 4 of regulation 100(3) produces a negative figure.

Those contributors who fall into Case 3 of regulation 100(3) will be liable to pay Class 4 NICs at 2% (2.73% for the 2022 to 2023 tax year) only on all of their profits above the LPL. »Ê¹ÚÌåÓýapp reason for this is that they will have paid an amount of Class 1 and/or Class 2 NICs that is more than:

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

It is important to note that regulation 100 provides contributors who fall into Case 3 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.

• NIM24184 - provides an example of a contributor who falls into Case 3 of regulation 100(3) but who is not required to pay additional rate Class 4 NICs because the profits do not exceed the UPL.
• NIM24185 - provides an example of a contributor who falls into Case 3 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 Class 4 NICs at the additional Class 4 NICs percentage because the amount of Class 1 and 2 NICs paid exceeds:

• 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.