Share this content

Class 2 NIC

Why is it reversed on HMRC calculation?

I think that this has been asked before but I can't find the answer.

On most of my clients' tax calculations that are produced by my 3rd party software, Class 2 NIC is correctly calculated and shown. However, when I receive the HMRC tax calculation, the Class 2 NIC has been omitted. Why do they do this? Are they deliberately trying to make my life difficult or is it something that I am doing wrong.

Many thanks.


Please login or register to join the discussion.

23rd Apr 2018 01:32

It's because your client is not in the self assessment system. You need to complete a CWF1 for them.

The chances are, they were self employed years ago, then ceased their businesses. Then started up again at a later date. But when they started up at that later date, no one told HMRC that your client was in business again.

Does that make sense?



Thanks (0)
23rd Apr 2018 08:07

I have had it for various clients, and not in the circumstances that John describes. People that have been in SA for years, paid their Class 2 by direct debit, and now HMRC are sending me revised calculations omitting the £145.60. The words - brewery, up, p1ss, organise and couldn't - spring to mind.

Thanks (1)
By MJShone
23rd Apr 2018 09:09

I have the same experience as claudialowe.

Thanks (0)
23rd Apr 2018 09:12

Its a complete [***] up by HMRC.

The SA record is populated by the NIC database.

Which doesn't look at what is on the SA return. Ie the sole trade that clearly exists as you have just told 'em about it.

I will be interested to see what happens with qualifying years for state pension purposes in 5-10 years with HMRC taking it off, when they have clearly notified a sole trader by putting it on their tax return, but HMRC have taken it off. Going to be some appeals.

Thanks (0)
23rd Apr 2018 10:23

From the ones that I've seen, the client has been self employed for years but HMRCs records don't have the appropriate link to the NIC records, so HMRC doesn't know they are self-employed and due to pay Cl 2 NIC.

This has been an issue since HMRC started to collect Cl 2 NIC on the return in 2015-16, but HMRC do seem have got their act together on these cases now. If you ring HMRC they will either correct the position over the phone if they can i.e. they already have details of the self-employed source with no 'link', or will provide you with the number to call the NICO to do something similar where there is no trace of the source at the NICO.

The side effect of the latter is of course is that you may find that clients have not been correctly registered for Cl 2 NIC at some point in the past, not been paying anything each year and so subsequently, they have huge holes in their contribution records. If so, they may find NICO sending them a bill for unpaid Cl 2 NIC for earlier years.

Still, this would be cheaper than paying voluntary Cl 3 NIC for those years!

Thanks (0)
31st Jul 2018 12:52

I've had this recently on several clients.

What HMRC are doing is applying the personal allowance to the self employed income and if the income is then below the NIC threshold, they're removing the Class 2 NIC.

Bizarrely, they're not adjusting the Class 4 liability though.

Thanks (0)
to MJ Green Accountancy
31st Jul 2018 13:16

MJ Green Accountancy wrote:

What HMRC are doing is applying the personal allowance to the self employed income and if the income is then below the NIC threshold, they're removing the Class 2 NIC.

Very much doubt it. The reason in EVERY case that I've seen is as described by the other contributors.
Thanks (0)
Share this content