NIM24505 | Class 4 NICs: who is liable: summary

Section 15 of the Social Security Contributions and Benefits Act 1992

Chapter 2 of Part 2 to the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005).

Class 4 NICs are paid by people who are self-employed and carrying on a trade, profession or vocation (SSCBA92/S15). Section 15 also provides that to be liabile to pay Class 4 the profits must be chargeable to income tax under Chapter 2 of Part 2 to the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005).

People who were self-employed are not liable to Class 4 NICs on post cessation receipts assessable under Chapter 18 Part 2 Income Tax (Trading and Other Income) Act 2005, (See BIM090010)

People who are self-employed but do not have profits chargeable to income tax under Chapter 2 of Part 2 to ITTOIA 2005 are not liable to Class 4. For example, people who make profits from property (which would be chargeable under Chapter 3 rather than Chapter 2).