Deduction of tax and contributions for self-employed earnersE+W+S
39.—(1) The amount to be deducted in respect of income tax under regulation 38 (1) (b) (i), (3) (b) (i) or (9) (a) (i) (calculation of net profit of self-employed earners) shall be calculated on the basis of the amount of chargeable income and as if that income were assessable to income tax at the basic rate of tax less only the personal relief to which the claimant is entitled under sections 8 (1) and (2) and 14 (1) (a) and (2) of the Income and Corporation Taxes Act 1970 (personal relief) F1 as is appropriate to his circumstances; but, if the period determined under regulation 30 (calculation of earnings of self-employed earners) is less than a year, the amount of the personal relief deductible under this paragraph shall be calculated on a pro rata basis.
(2) The amount to be deducted in respect of social security contributions under regulation 38(1)(b)(i), (3)(b)(ii) or (9)(a)(ii) shall be the total of—
(a)the amount of Class 2 contributions payable under section 7 (1) or, as the case may be, (4) of the Social Security Act F2 except where the claimant's chargeable income is less than the amount for the time being specified in section 7 (5) of that Act F3 (small earnings exception); and
(b)the amount of Class 4 contributions (if any) which would be payable under section 9 of that Act F4 (contributions recoverable under Taxes Acts) in respect of profits or gains equal to the amount of that income.
(3) In this regulation “chargeable income” means—
(a)except where sub-paragraph (b) applies, the earnings derived from the employment less any expenses deducted under paragraph (3) (a) or, as the case may be, (4) of regulation 38;
(b)in the case of employment as a child minder, one-third of the earnings of that employment.
Textual Amendments
F11970 c. 10; section 8 (1) was amended by the Finance Act 1971 (c. 68) section 37 Schedule 6 paragraphs 1 and 5, and the Finance Act 1985 (c. 54) section 36, subsection (1A) was added by the Finance (No.2) Act 1975 (c. 45) section 31 and amended by the Finance Act 1977 (c. 36) section 22. Subsection (1B) was added by the Finance (No.2) Act 1975 section 31. Section 8 (2) was amended by the Finance Act 1971 section 37 Schedule 6 paragraphs 1 and 5 and article 2 of S.I. 1985/430; sub-paragraph (b) was substituted by the Finance (No.2) Act 1979 (c. 47) section 12 Schedule 2 paragraph 1; sub-paragraph (b) (i) and (ii) were amended by the Finance Act 1981 (c. 35) section 139 Schedule 19 Part VI and the Finance Act 1982 (c. 39) section 157 Schedule 22 Part IV; sub-paragraph (b) (iii) was added by the Finance Act 1981 (c. 35) section 27 and sub-paragraph (b) (iv) by the Finance Act 1987 (c. 16) section 27. Section 14 (1) was amended by the Finance Act 1970 (c. 24) section 14 Schedule 8 Part VI; section 14 (2) was amended by the Finance Act 1976 (c. 40) section 36, the Finance (No.2) Act 1979 (c. 47) section 11 Schedule 1 paragraph 2 and the Finance Act 1980 (c. 48) section 24.
F2Section 7 (1) was amended by section 2 (4) of the Education (School-Leaving Dates) Act 1976 (c. 5), section 17 (1) of the Health and Social Security Act 1984 (c. 48) article 3 of S.I. 1986/25 and article 3 of S.I. 1987/46.
F3Section 9 was amended by sections 4 and 65 of, and Schedule 5 to, the Social Security Pensions Act 1975 (c. 60), the Social Security (Contributions) Act 1982 (c. 2) section 1 and by S.I. 1986/25.
F4Section 7 (5) was amended by article 3 of S.I. 1986/25 and S.I. 1987/46.
Commencement Information