PART 6Income and capital
SECTION 4Self-employed earners
Deduction of tax and contributions of self-employed earners39
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 F2... and the basic rateF7, or in the case of a Scottish taxpayer, the Scottish basic rate, of tax applicable to the assessment period less only the F8personal 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 assessment period is less than a year, the earnings to which the F1F3basic rateF9, or the Scottish basic rate, of tax is to be applied and the amount of the personal F10reliefs deductible under this paragraph shall be calculated on a pro rata basis.
2
The amount to be deducted in respect of F4national insurance 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 F511(2) or, as the case may be, F611(8) of the Act at the rate applicable to the assessment period except where the claimant's chargeable income is F12equal to or less than the amount specified in F13section 11(4)(a) of the Act (F11lower profits threshold) for the tax year applicable to the assessment period; but if the assessment period is less than a year, the amount specified for that tax year shall be reduced pro rata; and
b
the amount of Class 4 contributions (if any) which would be payable under section 15 of the Act (Class 4 contributions recoverable under the Income Tax Acts) at the percentage rate applicable to the assessment period 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 applicable to the assessment period; 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.