The income tax rates, along with the Class 2 and Class 4 National Insurance rates for 2020/21 are as follows:
The income tax rates, along with the Class 2 and Class 4 National Insurance rates for 2021/22 are as follows:
Small Profits Threshold: If you’re earning below the Small Profits Threshold, you’re not required to pay Class 2 NICs. But if you choose, you may pay Class 2 NICs voluntarily at the end of the tax year.
Lower Profits Limit: If you’re earning up to or below this limit, you’re only required to pay Class 2 NICs.
Upper Profits Limit: If you’re earning up to or below the Upper Profits Limit, you’ll need to pay Class 2 NICs, as well as Class 4 NICs (9%) on profits between the LPL and UPL.
If you’re earning above this limit, you’ll need to pay Class 2 NICs, Class 4 NICs (9%) on profits between the LPL and UPL, and Class 2 NICs (2%) on profits above the UPL.
We help you understand how to actually pay yourself as a limited company director or sole trader. This guide helps explain the different tax rates, filing requirements and which company structure is best for you.
