PART IIIE+W+S SELF-EMPLOYED EARNERS

Deduction of tax and contributions for self-employed earnersE+W+S

14.—(1) The amount to be deducted in respect of income tax under regulation 13(1)(b)(i), (4)(b)(i) or (10)(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 [F1basic rate, or in the case of a Scottish taxpayer, the Scottish basic rate, of tax less only the personal reliefs to which the claimant is entitled under Chapters 2, 3 and 3A of Part 3 of the Income Tax Act 2007 as are] appropriate to his circumstances; but, if the period determined under regulation 11 (calculation of earnings of self-employed earners) is less than a year, the earnings to which the [F2basic rate, or the Scottish basic rate,] of tax is to be applied and the amount of the personal [F3reliefs] 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 13(1)(b)(i), (4)(b)(ii) or (10)(a)(ii) shall be the total of—

(a)the amount of Class 2 contributions payable under section [F411(2)] or, as the case may be, [F511(8)] of the Contributions and Benefits Act at the rate applicable at the date [F6 of the determination of the claim or of any subsequent review [F6on which a decision is made by the Secretary of State under Chapter II of Part I of the Social Security Act 1998 or regulations made thereunder]] except where the claimant’s chargeable income is less than the amount specified in section 11(4) of that Act ([F7small profits threshold]) for the tax year in which that date falls; but if the assessment period is less than a year, the amount specified for that year shall be reduced pro rata; and

(b)the amount of Class 4 contributions (if any) which would be payable under section 15 of that Act (Class 4 contributions recoverable under the Income Tax Acts) at the percentage rate applicable at the date of the determination of the claim or of any subsequent review on so much of the chargeable income as exceeds the lower limit but does not exceed the upper limit of profits and gains applicable for the tax year in which that date falls; but if the assessment period is less than a year, those limits shall be reduced pro rata.

(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 (4)(a) or, as the case may be, (5) of regulation 13;

(b)in the case of employment as a child minder, one-third of the earnings of that employment.

Textual Amendments

Modifications etc. (not altering text)

C1Regs. 11-14 modified by S.I. 2002/1792, reg. 17B (as inserted (6.10.2003) by State Pension Credit (Consequential, Transitional and Miscellaneous Provisions) Regulations 2002 (S.I. 2002/3019), regs. 1(2)(b), 23(i)) (as amended (5.8.2016) by (S.I. 2016/732), arts. 1(1), 4(2))