Sole trader has adjusted profits this year of £9,081. Losses B/F from last year £1,996, net chargeable to IT £7,085.
What is the amount chargeable to Class 4 Nic?
Logic suggests it should be £7,085. HMRC software has calculated it on £9,081.
Many thanks for all responses.
Replies (5)
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Have you entered the b/fwd loss in the class 4 NIC adjustment box? I don't use the HMRC software but on the paper form it's box 102 of the SA103F.
You can't complete short form
I don't use the HMRC software but on the paper form it's box 102 of the SA103F.
As the 'F' at the end of SA103F implies, that's the full version of the self employed pages. The short version does not have a box to enter adjustments to profits that Class 4 is calculated on.
Short form
I thought I'd done it on the short form. Isn't there a question "Do you need to make adjustments to your profits for Class 4 NIC?"
May be wrong and haven't got time to look just now .......
Anyway - the point is - Class 4 losses are a separate claim. You don't need to claim them in the same way as Income Tax losses so you can't assume that claiming a loss against Income Tax will get your Class 4 right. It won't.
You're right that the Class 4 profits should be £7085.
Misleading wording
I thought I'd done it on the short form. Isn't there a question "Do you need to make adjustments to your profits for Class 4 NIC?"
May be wrong and haven't got time to look just now .......
Anyway - the point is - Class 4 losses are a separate claim. You don't need to claim them in the same way as Income Tax losses so you can't assume that claiming a loss against Income Tax will get your Class 4 right. It won't.
You're right that the Class 4 profits should be £7085.
The form is badly designed. The section for boxes 33 to 38 on the Short form has the heading 'Losses, Class 4 NICs and CIS deductions' this would lead the unwary, including me in the past, to believe that boxes 33 to 35 which relate to losses would also affect the Class 4 calculation. They don't. Boxes 36 and 37 which deal with exemption and deferment, are the only ones which deal with Class 4.
I am wrong
If you look at the questions you need to answer "no" to in order to get to the short form, one of them is about Class 4 losses.
Quite right - you have to do the full form.