Sole Trader National Insurance query

[Silky]

Hi,
We set incorporated our company in May 2008, for the 8 months prior to that I'd mainly been amassing costs (website, design etc.). I was still in full employment whilst working on our website.

As I'm working on my self assessment form, I'm entering the costs incurred in the period up to March 08 and I've had to retrospectively register as a sole trader for that period.

I've just received a demand from the HRMC for national insurance from 14th April 08 up to 4th January 09 yet I'm currently earning £56k p.a. in my full time employed position. Surely I've paid than enough national insurance through PAYE?

Thanks,
Silky

[CassioAcc]

If you are employed and pay Class 1 elsewhere you can apply for a deferrment of Class 2 and 4

[ellbristow]

All self employed individuals have to pay Class 2 national insurance at a rate of £2.30 / week (currently). This is regardless of whether you are paying NI in another employment (which is Class 1 NI).

However, if you project your annual profit from self-employment to be less than £4,825 (including if you make a loss) then you can apply for exemption from Class 2 NI. The form to apply (CF10) is available from HMRC at http://www.hmrc.gov.uk/forms/cf10.pdf

[ellbristow]

Alternatively you can apply for deferment at http://www.hmrc.gov.uk/nic/deferment.htm

[Silky]

All self employed individuals have to pay Class 2 national insurance at a rate of £2.30 / week (currently). This is regardless of whether you are paying NI in another employment (which is Class 1 NI).

However, if you project your annual profit from self-employment to be less than £4,825 (including if you make a loss) then you can apply for exemption from Class 2 NI. The form to apply (CF10) is available from HMRC at http://www.hmrc.gov.uk/forms/cf10.pdf

For the year ending Mar 08 my self employment would make a loss (which I'm hoping to offset against my PAYE tax).

For 2009, we incorporated 23rd May 08, the month before that I can also show as a loss.

Does this mean I'd be exempt? It's not a huge sum admittedly but it just irks me when I'm already paying a fortune in tax /NI in my pay packet.

Thanks again,
Silky

[ellbristow]

Yes it sounds like it... but you must apply for exemption. You will also have to ask HMRC to back-date the exemption. As far as I'm aware that's not a problem.

I'll pre-warn you, HMRC can be very slow processing a CF10. Keep chasaing them if they keep sending you NI demands.