In this article, we will look at the different classes of NICs, class 1 NICs, class 2 NICs, and class 3 NICs. We’ll also discuss how to calculate your NIC premiums, and why a NIC is important for you. Once you know more about NICs, you’ll be better prepared to make financial decisions and manage your money. To get started, visit Money & Me.
Class 1 NICs
If you’re self-employed, you will have to pay Class 1 NICs as well as employer contributions. The amount you owe will depend on your type of business and the nature of your earnings. For example, you can owe Class 1A NICs if you work from home on a split year basis. However, if you are employed in another country, you may owe Class 1A NICs even if you work abroad for part of the year.
Class 2 NICs
When it comes to claiming a State Pension, self-employed individuals have a choice between paying Class 2 or 3 NICs. The former are voluntary payments for low-profit individuals, and the latter are compulsory contributions for those who work for a profit. Both types of NICs protect the individual’s State Pension entitlement, as well as their entitlement to contributory Employment and Support Allowance and Bereavement Benefits.
Class 3 NICs
Despite the abolition of Class 2 NICs, self-employed people are still entitled to certain benefits via the NICs system. For example, if self-employed individuals earn less than PS6,000 per year, they could choose not to pay Class 3 NICs. However, such a decision may reduce their State Pension entitlement. This is why the government will consider whether to allow self-employed people to continue to make voluntary contributions to NICs.
Class 4 NICs
The new regime for paying self-employed National Insurance contributions will bring self-employed NICs closer to those of employed earners and could pave the way for future NIC mergers. In 2017, the self-employed should have paid their new-look Class 4 contributions. As a result, their self-employed NICs will resemble those of employed earners. It is not clear how much more self-employed will pay, but the new regime will be very similar to the previous regime.
Class 5 NICs
Self-employed individuals pay NICs under the self-assessment system. Class 4 NICs are related to the amount of self-employed income over a certain threshold. Class 2 NICs are flat-rate and cover self-employed individuals with lower incomes. Both classes of NICs are calculated and declared on the tax return, which is completed by the end of the tax year, usually in January. Self-employed individuals who earn less than PS6,205 a year are automatically exempt from Class 2 NICs.
Class 6 NICs
The class 2 and class 6 national insurance contributions are calculated along with your income tax liabilities. Both are due on 31 January of the year after the tax year ends. If you earn more than these thresholds, you are liable to pay class 2 NICs. However, if you earn less than PS11,908 in a year, you’ll only be liable for class 2 NICs. Therefore, you can claim contributory benefits if you pay class 2 NICs.
Class 7 NICs
The seven classes of NICs are used to describe health care interventions, most of which are directly directed to individuals. Other types of interventions are directed to groups of people, communities, or systems of care. There are 565 interventions included in the seventh edition, which are grouped into 30 domains: physiology, family, health system, and community. While the NIC classification has many uses, these are the most common. If you’re not sure which category your intervention falls under, you can always check out the following:
Class 8 NICs
NICs are hardware components that allow computers to communicate over a network. Network controllers implement the electronic circuitry required to perform communications at the physical and data link layers. These components enable communication among local area networks, large-scale networks, and wireless networks. They also provide low-level addressing systems and physical access to the networking medium. However, not all Class 8 NICs are the same. To find out if a particular card is right for your computer, you need to understand how these devices function.
Class 10 NICs
Class 10 NICs are payable by most employees whose wages exceed the basic threshold. This threshold can be paid on weekly, monthly, or annual earnings. Class 1 NICs are based on the amount earned in each pay period and are not cumulative, like income tax deducted under PAYE. It is therefore important to pay the correct amount of NICs every time you receive your paycheck. Below is a breakdown of the thresholds.