C1PART VINCOME AND CAPITAL
CHAPTER IVself-employed earners
Deduction of tax and contributions for self-employed earnersI139
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 F1the lower rate or, as the case may be, the lower rate and the basic rate of tax less only the F5personal allowance to which the claimant is entitled under F6section 257(1) of the Income and Corporation Taxes Act 1988 (F5personal allowance) 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, F2the earnings to which the lower rate F4... of tax is to be applied and the amount of the F5personal allowance 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—
F3a
the amount of Class 2 contributions payable under section 11(1) or, as the case may be, 11(3) of the Contributions and Benefits Act at the rate applicable at the date of claim except where the claimant’s chargeable income is less than the amount specified in section 11(4) of that Act (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 reduced pro rata; and
F3b
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 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 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 (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.
Pt. V applied (with modifications) (S.) (6.10.2003) by The National Health Service (Travelling Expenses and Remission of Charges) (Scotland) (No. 2) Regulations 2003 (S.S.I. 2003/460), reg. 1, sch. Pt. I Table A (with reg. 13)