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qtn:
shona started business on 1 jan 2025 as a sole trader nd prepared her first set of accounts for 14 weeks to 5 april. her assesable profit for 24-25 is 13500.
we hv learnt a rule of pro rating the threshold limit right when not whole 12 months r used. so what i did is pro rated the lowe nd upper limits
lower limit 12570/52* 14= 3348 so limit being 1-3348
upper limit 50250/12*14= 13543 so limit being 3348-13534
then calcuted the nic as 3348*0%
(13500-3348)*6%but in solution they just did (13500-12570)*6%
can u tell y they hv not pro rated as per 14 weeks?
You would pro-rate the limits for Class 1 Primary for an EMPLOYEE, but the limits for Class 4 for the SELF-EMPLOYED/SOLE TRADER is never pro rated.
Class 1 Primary (employee) and Secondary (employer) are calculated for an earnings period (either weekly or monthly) and so you would use the weekly or monthly limits (so yes, time apportioned).
Class 1A (employer) is calculated on taxable benefits provided during the tax year which will have ALREADY BEEN TIME APPORTIONED to arrive at the taxable benefits figure, so it would just be that figure x rate of Class 1A NIC (i.e. do not time apportion twice).
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