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Class 4 maximum, deferment and SA return

Class 4 maximum, deferment and SA return

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I have a client who has PAYE income of £100K+ and self-employment income.  He has paid the maximum Class 1 for 2015/16 and so only needs to pay the 2% Class 4.  I can't find anywhere on the 2015/16 tax return that caters for this as the deferment box has gone.  Are we supposed to fudge a figure in box 102 to get to the correct NIC payable figure or pay the full Class 4 and indeed Class 2 on the return and get an eventual repayment from Newcastle? 

Has anyone resolved this?

Replies (14)

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By simonsheppard1975
18th May 2016 14:35

I've just had a similar problem with a doctor and have just posted a similar query! Deferments have been removed since April 2015 I've learnt today. Apart from that I'm not too sure how Class 4 NIC works these days. Hopefully someone else can clarify!

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By JayB2606
18th May 2016 15:08

Due to the changes to class 2, From 2015/16 onwards, information on your self-assessment return, will enable HMRC to determine the amount of any Class 2 or Class 4 National Insurance contributions you need to pay. A breakdown of all the amounts to be paid will be displayed on their self-assessment calculation. so there is no longer the box to tick.

So depending on what software you use, will determine how you enter the information. I know on PTP it is entered through the Calculation pages.

hope this helps

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By craig preece
18th May 2016 15:44

Historically I have fudged a figure into 102 and noted in addn info box "adj at 102 to calc NI correctly at 2%/9%, etc.", although this does require a manual calc re Class 1 + 2 paid. While this may not be technically correct it achieves the correct result and has not been queried by HMRC.
Also I do not see how the Class 4 can be calculated correctly by the software as I cannot see a box to enter Class 1 paid anywhere on the Return, is there one?

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Replying to craig preece:
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By JayB2606
18th May 2016 15:53

craig preece wrote:

Historically I have fudged a figure into 102 and noted in addn info box "adj at 102 to calc NI correctly at 2%/9%, etc.", although this does require a manual calc re Class 1 + 2 paid. While this may not be technically correct it achieves the correct result and has not been queried by HMRC.
Also I do not see how the Class 4 can be calculated correctly by the software as I cannot see a box to enter Class 1 paid anywhere on the Return, is there one?

The box to enter Class 1 is not on the tax return its self, but on the calculation section on our software

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Replying to JayB2606:
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By JayB2606
18th May 2016 16:01

The amount to enter on on the calulcation pages are -

1 - earnings from PT to UAP
2- earnings from UAP to UEL

Thanks (2)
Replying to JayB2606:
By KevinM
15th Jan 2017 09:26

JayB2606 wrote:

The amount to enter on on the calulcation pages are -

1 - earnings from PT to UAP
2- earnings from UAP to UEL

This is spot on, you really need the P60 for the client and add the details of NIC on the employment pages of the software. The Class 4 NIC then recalculates. So while the process of 'deferment' no longer applies the rate of class 4 remains reduced for clients with enough Class 1 NIC contributions just as before. This is more a change in process rather than rate.

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Replying to craig preece:
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By vince8
18th May 2016 16:24

Historically? What the hell do you mean??

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By Tim Vane
18th May 2016 16:26

I would have thought that all commercial software would do this calculation as I assume it is a requirement of being recognised HMRC software. But then, nothing surprises me anymore w.r.t. HMRC and software, so I suppose anything is possible.

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By Paul D Utherone
18th May 2016 17:46

As noted, from 2015-16 the HMRC computation should allow for this - the computation issued to developers includes the Reg100 calculation and adjusts the total Class 4 due. So if you're using third party software there should be somewhere to add earnings from UAP to UEL

HMRC client records "Info to help complete your return" has new boxes that are supposed to show (2) but for one that I am aware of does not - it just shows "Total Class 1 NICable earnings between the PT and UEL:Not Available"

I should be interested to know if the HMRC return software has a box to enter this and if so where. Presumably under MTD this will autocomplete from data collected by RTI

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By jon_griffey
19th May 2016 10:59

Thanks all for your responses. I have discovered that there is a box in Iris PT when entering employment income, to enter the 1c and 1d figures. It is a bit strange that these figures do not then appear anywhere on the return, so there is no way of HMRC proving the return calculations. They are not showing online in the information to help you complete your return section, so I dare say that when I file the return they will amend the return to charge the full Class 4.

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Replying to jon_griffey:
By Paul D Utherone
19th May 2016 11:15

the Box 1C figure is an element included in the XML submission file, so one would hope that there will be no rejection or amendment. Then again as it is not autopopulating in the HMRC Client info in Online Services who knows what will happen!? Well I suppose you will shortly when you submit the return ;)

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Replying to Paul D Utherone:
By jon_griffey
02nd Jun 2016 10:26

Paul D Utherone wrote:

the Box 1C figure is an element included in the XML submission file, so one would hope that there will be no rejection or amendment. Then again as it is not autopopulating in the HMRC Client info in Online Services who knows what will happen!? Well I suppose you will shortly when you submit the return ;)

Well I have found out what happens. Having filed the return, with the correct 1c and 1d figures entered on Iris, HMRC have only gone and amended the return to put the full Class 4 charge back in - despite the client having a 150K+ salary. Bl**dy hopeless.

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By Mister E
25th May 2016 19:03

Another One issue here is when you have a P45 and no P60. My staff have tried to get the NIC figures for UEL, etc and no one in HMRC seems to have them so it is nigh on impossible to work out if there should be "deferment" and C4 NIC calculated at 2%, unless of course the employment income is well below the limits.
Also in your case what did you do with Class 2 NIC? Did you put nil (as paid enough Class 1 NIC)?
When the Tax Return is filed I, for one, would be very interested in what happens. Are any of the NIC figures amended, do HMRC accept it?

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By Southbankdelboy
13th Oct 2016 16:35

We are having the same issues with our clients having both employed (£100k+) and self employed income. Up to 14/15 we had deferment certificates for both Class 2/4 NIC's so our clients paid only the 2% class 4 NIC.

But for 15/16 HMRC change our submitted returns to charge Class 2 and Class 4 @9%! This is not going down well with clients as our calcs. differ from HMRC and we have spent a considerable amount of time speaking to HMRC to have it sorted all to no avail so far! Very frustrating.

Can someone please clarify the Class 2 position - is this now payable even though for all years up to 14/15 deferment meant no Class 2 paid? Is this a way of HMRC obtaining an extra £145.60 from these taxapayers from 15/16?

And has anyone had success getting hmrc to reduce the Class 4 NIC to the 2% rate? Please share how this was achieved.

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