NI and Tax -which is deducted first?

[SMJ]

Sorry to ask very basic question but it's many many years since I did my own self employed tax returns and I'm checking it all to help my son set up.

I found all the rates for tax and national insurance. He might have to pay a small anount of Class 4 NI on top of Class 2.

But does NI apply to the the net taxable income AFTER tax?
Or is NI taken off first and then you pay income tax on the remainder?

Or does the gross income get used as the start figure to calculate both payments separately? Because this is taxing the same income twice! Which wouldnt be a major surprise under this Govt but one lives in hope.

[iwebshop]

Originally Posted by SMJ

Or does the gross income get used as the start figure to calculate both payments separately? Because this is taxing the same income twice! Which wouldnt be a major surprise under this Govt but one lives in hope.

This and NI is going up next year...

[Nilesh Mandvia]

Originally Posted by SMJ

Or does the gross income get used as the start figure to calculate both payments separately? Because this is taxing the same income twice! Which wouldnt be a major surprise under this Govt but one lives in hope.

NI & TAX is calculated on the profit you make. You do not deduct either of them to calculate the other one.

For example Income less expenses = Profit of £10,000. The Ni and Tax is calculated on £10,000. You need to know tax tables and allowance in order to calculate correctly.

Originally Posted by iwebshop

This and NI is going up next year...

It is going up by 1% from April-2011.