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Class 2 NI liability less than £100.

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I have just done and SA return.  The client only has a liability of £88.45 which is Class 2 NI as she started in business in September.  The liability is less than £100 so HMRC might not send a statement or will they?  If they don't and the client doesn't pay, is it deemed to have been paid late and not credited to the client's NI account?  One might say it doesn't count as a year anyway but who knows what the legislation might be in the future.

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RLI
By lionofludesch
18th Oct 2021 08:50

What was she doing before September ?

Personally, I'd pay it. As you say, rules can change.

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RLI
By lionofludesch
18th Oct 2021 08:50

.

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Replying to lionofludesch:
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By Catherine Newman
18th Oct 2021 09:00

Unfortunately nothing but now you've asked the question she has a child so presumably will be covered by Home Income protection for her pension.

I think she should pay it too but it is whether HMRC actually issue a statement.

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By Paul Crowley
18th Oct 2021 09:07

It is a tax liability
It gets carried forward
It does not go away just because the taxpayer chooses not to pay for six years

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Replying to Paul Crowley:
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By Catherine Newman
18th Oct 2021 09:19

I don't think it is a tax liability. It goes on to a separate system but if you don't pay it on time they remove it from your calculation if you are paying voluntarily.

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Replying to Catherine Newman:
RLI
By lionofludesch
18th Oct 2021 09:49

Catherine Newman wrote:

I don't think it is a tax liability. It goes on to a separate system but if you don't pay it on time they remove it from your calculation if you are paying voluntarily.

So it's voluntary.

Then if she wants it to count, she must pay.

The separate issue is, does she need to ?

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Replying to Catherine Newman:
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By AdamMurphy
18th Oct 2021 11:22

It's definitely removed if not paid by 31st Jan, then a revised tax calculation issued.

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By ireallyshouldknowthisbut
18th Oct 2021 09:16

You could just tell your client to pay it without a statement.

We have largely abandoned suggesting clients wait for statements given so many don't show up, and give clear instructions of payment dates and methods.

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Replying to ireallyshouldknowthisbut:
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By Catherine Newman
18th Oct 2021 09:18

Thank you very much. That is a good idea.

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By rmillaree
18th Oct 2021 09:18

Catherine Newman
" The liability is less than £100 so HMRC might not send a statement or will they?"

I simply don't get your point here - not sure what i am missing? Note if you are talking about "voluntary" class 2ni then thats a compeltely differnt issue - your post does not mention voluntary class2ni so will presume this is mandatory class2 NI

You do the calculation of class2ni when you do tax return -if there is a bill of 88.45 it will most certainly need paying whether hmrc send out a statement or not.
Are you thinking the client doesnt need to pay a bill of 88.45? - if you are thinking that i am puzzled as to why you would think that. Unfortunately with tax owed never rely on hmrc sending statements - they may simply jump to debt collection agencies at some random future point in time - much simpler to pay what is owed to be oon safe side.

Note there are some de minimis small amounts hmrc may not chase - but those amounts are never written off by hmrc (normally speaking). Even for small amounts i tell client to pay as the bill wont go away even if hmrc dont take the trouble to chase.

"One might say it doesn't count as a year anyway but who knows what the legislation might be in the future."
I have no idea what you mean by this statement of course it counts if its in the sa tax calculation!

Final note if its a voluntary payment of class2 NI then that is completely different - if client does not pay by 31st January (following 5th april) then hmrc will remove bill from sa and stop chasing on the basis client has chosen not to pay. So voluntary class2 ni bills can be ignored. Note if client wants to pay and does not do so before 31st January then they will have to get payslip to pay outside of sa if they miss 31st January payment deadline.

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Replying to rmillaree:
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By Catherine Newman
18th Oct 2021 09:24

Hi. Your post crossed with mine. It is voluntary Class 2 so if it didn't get paid by 31 January HMRC might not credit it and send an SA302. £88.45 isn't a full year's NI is what I am thinking.

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Replying to Catherine Newman:
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By rmillaree
18th Oct 2021 09:43

" It is voluntary Class 2 so if it didn't get paid by 31 January HMRC might not credit it and send an SA302. £88.45 isn't a full year's NI is what I am thinking."

Hello Catherine

reference voluntary class2NI you make the original decision when you complete the tax return and indicate whether voluntary class2 ni is to be included in tax calculation (it exists) or dont (it doesnt exist)

If you choose for voluntary class2Ni not to be paid then it doesnt exist and isnt part of the calculation and therefore there is no class2 NI due- simples end of.

I suspect the fact you mention the amount suggests you have elected for this to be billed when sa return was completed ? - if thats the case the 88.45 will certainly show up on hmrc systems so normal principles will apply. However when you get to 1/2/2022 the amount simply vanishes from the system and hmrc proceed on the basis the client did not want to pay - so they default to amount not being due . Its all mechanical in that regard. If i am advising client i always say if you want to pay class2NI voluntary youmust do so by 31st January - blah .....

the fact its not a full year is irellevant - voluntray ni will show up and then vanish if not paid however large or small the period unless you elect for the class2ni not to be billed in the first place.

Note you may find that hmrc default to poresuming your client does NOT want to pay voluntary NI - either way when completing the return you should ensure the original tick box (or similar) matches what your chosen route is.

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Replying to rmillaree:
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By Catherine Newman
18th Oct 2021 09:55

Hi. The query has arisen as a result of me doing the SA return. I had a niggling doubt how it might be treated but I will advise the client to pay it before 31 January.

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Replying to Catherine Newman:
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By rmillaree
18th Oct 2021 10:36

"I had a niggling doubt how it might be treated but I will advise the client to pay it before 31 January."

How did you treat this on the return you completed ? - did you choose to pay the class2NI or did you choose not to not pay the class 2NI?.

If unsure you should look at the final tax calculation generated - if the amount is not included in that calculation then you have elected to "not pay class 2 ni". If that is the case any payment made will simply be treated as uncallocated credit on the sa acount.

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By Matrix
18th Oct 2021 11:43

If she doesn’t get a year’s credit then why would she pay this since I assume there is no benefit?

You should also establish if she has a child under 12 and has previously claimed child benefit since then she gets NI credits each year.

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Replying to Matrix:
RLI
By lionofludesch
18th Oct 2021 12:24

Matrix wrote:

You should also establish if she has a child under 12 and has previously claimed child benefit since then she gets NI credits each year.

Is it not each week until the last child gets to 12 ?

But the key to this question is whether she will benefit from paying and we haven't really established whether she would. We know she hadn't worked until September but we don't know about her home responsibilities.

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Replying to lionofludesch:
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By Matrix
18th Oct 2021 13:07

Only if the form was completed, it is not automatic.

I don’t see what she is getting for her £88.

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Replying to Matrix:
RLI
By lionofludesch
18th Oct 2021 13:13

Matrix wrote:

Only if the form was completed, it is not automatic.

Which form ?

"I don’t see what she is getting for her £88."

Depends. Maybe her youngest turned 12 in September. We don't know.

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Replying to lionofludesch:
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By Matrix
18th Oct 2021 13:28

To claim child benefit in the first place (even if it is then disclaimed, believe it or not many new parents don’t complete the forms).

So a partial year is beneficial for class 2 because it is weekly? We are just guessing, I assume the client can see whether she has a full or partial year in her personal tax account.

I am sure the OP knows what she is doing.

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Replying to Matrix:
RLI
By lionofludesch
18th Oct 2021 13:31

Matrix wrote:

So a partial year is beneficial for class 2 because it is weekly?

It is if the rest of it is covered in some other way, yes. There's more ways to cover your NI record than self employment.

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Replying to lionofludesch:
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By rmillaree
18th Oct 2021 14:51

Are there not other reasons why one might want to ensure they do pay the class2ni - eg does class2NI need to be paid for one to be eligible for maximum maternity allowance? - or to be eligible for employment support allowance?

Must admit i try not to get in discussions in that regard (ref what they get benefits wise and whether what they have would make a difference in that regard if its part year) just in case i miss something that may be relevant.

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Replying to rmillaree:
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By Catherine Newman
18th Oct 2021 17:40

We have said to pay voluntarily on the SA return. She is pregnant and able to claim the maximum maternity pay. She has just got the letter. The child she has is 4.

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