Regulation 26 Deduction of tax and contributions for self-employed earnersI1
England, Wales and Scotland
The amount to be deducted in respect of income tax under regulation 25(1)(b)(i), (3)(b)(i), (4)(b)(i) or (11)(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 F1the lower rate or, as the case may be, the lower rate and the basic rate of tax in the year of assessment in which the claim was made, less only the personal relief to which the claimant is entitled under F2sections 257(1), (6) and (7) and 259 of the Income and Corporation Taxes Act 1988f1 (personal relief) as is appropriate to his circumstances; but, if the assessment period is less than a year F3, the earnings to which the lower rate F4...of tax is to be applied and the amount of the personal relief deductible under this paragraph shall be calculated on a pro rata basis.
The amount to be deducted in respect of social security contributions under regulation 25(1)(b)(i), (3)(b)(ii), (4)(b)(ii) or (11)(a)(ii) shall be the total of—
the amount of Class 2 contributions payable under section 7(1) or, as the case may be, (4) of the Social Security Actf2 at the rate applicable at the date of claim except where a claimant’s chargeable income is less than the amount specified in section 7(5) of that Actf3 (small earnings exception) for the tax year in which the date of claim falls; but if the assessment period is less than a year, the amount specified for that tax year shall be calculated on a pro rata basis; and
the amount of Class 4 contributions (if any) which would be payable under section 9(2) of that Actf4 (Class 4 contributions) at the percentage rate applicable at the date of claim 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 the date of claim falls; but, if the assessment period is less than a year, those limits shall be calculated on a pro rata basis.
In this regulation “chargeable income” means—
except where sub-paragraph (b) or (c) applies, the earnings derived from the employment, less any expenses deducted under paragraph (3)(a), (4)(a), (5) or (6), as the case may be, of regulation 25;
except where sub-paragraph (c)(iii) applies, in the case of employment as a child minder one-third of the earnings of that employment; or
where regulation 17(3) applies (normal weekly earnings of self-employed earners)—
in the case of a self-employed earner who is engaged in employment on his own account, the claimant’s estimated earnings from the employment, less the amount of the deductions likely to be made and, where appropriate, made under sub-paragraph (a) of paragraph (3) of regulation 25;
in the case of a self-employed earner whose employment is carried on in partnership or is that of a share fisherman within the meaning of the Social Security (Mariners' Benefits) Regulations 1975f5 , the claimant’s estimated and, where appropriate, his share of the actual earnings from the employment, less the amount of his share of the expenses likely to be deducted and, where appropriate, deducted F5under paragraph (5) of regulation 25;
in the case of employment as a child minder, one-third of the claimant’s estimated and, where appropriate, actual earnings from that employment.
Annotations
Textual amendments
- F1
Words in reg. 26(1) substituted (5.10.1992) by The Income-related Benefits Schemes (Miscellaneous Amendments) (No. 3) Regulations 1992 (S.I. 1992/2155), reg. 1(1), Sch. para. 7(a)(i)
- F2
Words in reg. 26(1) substituted (5.10.1992) by The Income-related Benefits Schemes (Miscellaneous Amendments) (No. 3) Regulations 1992 (S.I. 1992/2155), reg. 1(1), Sch. para. 7(a)(ii)
- F3
Words in reg. 26(1) inserted (5.10.1992) by The Income-related Benefits Schemes (Miscellaneous Amendments) (No. 3) Regulations 1992 (S.I. 1992/2155), reg. 1(1), Sch. para. 7(a)(iii)
- F4
Words in reg. 26(1) omitted (with effect in accordance with reg. 1(4) of the amending S.I.) by virtue of The Income-related Benefits Schemes (Miscellaneous Amendments) (No.5) Regulations 1994 (S.I. 1994/2139), regs. 1(1)(b), 4
- F5
Words in reg. 26(3)(ii)(c) substituted (5.10.1992) by The Income-related Benefits Schemes (Miscellaneous Amendments) (No. 3) Regulations 1992 (S.I. 1992/2155), reg. 1(1), Sch. para. 7(b)
Commencement
Footnotes
- f1
- f2
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Section 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), and article 3 of S.I. 1991/505.
- f3
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Section 7(5) was amended by article 3 of S.I. 1991/505.
- f4
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Section 9 was amended by sections 4 and 65 of, and Schedule 5 to, the Social Security Pensions Act 1975 (c. 60), section 1 of the Social Security Contributions Act 1982 (c. 2) and S.I. 1991/505.
- f5