in 2020/2021, a client had self employment income (£40,000), SEISS grants (£12,000) and employment income (£15,000). Their employment income was actually earned between December 2020 and March 2021, so it was a considerable amount in a short time. When completing their SA tax return, their class 4 national insurance was reduced due to their earnings over the primary threshold and below the upper earnings limit in employment. It reduced their total liability by around £750.00.
To me, this all seemed correct. But then HMRC wrote to us and the client with a new calculation and it has removed the reductiong in NIC. It isn't taking into account the fact that NIC was paid under employment. Is this correct or have HMRC messed up? When looking at the 'information that may help complete their return' through the agent portal, it says:
Total Class 1 NICable earnings between PT and UEL: Not Available
The PAYE year end was filed on 9 April 2021. RTI's were always done on time. Has anyone else experienced this issue?
Replies (5)
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Even pro-rated, the employment income would not generate the maximum Class 1 NI (and certainly not in 4 months). Why do you believe that your client should not pay Class 2?
Where did you pick up the PT-UEL income details from? The P60/PAYE records?
As the Agent Portal shows "Total Class 1 NICable earnings between PT and UEL: Not Available" it sounds as if you have picked up the details and entered them in your 3rd Party Software, which should have done the C4NIC adjustment correctly, but HMRC SA & NICO records have not caught up yet, so the HMRC SA system has issued an automatic correction. to remove the adjustment.
If that is the case, then once the PAYE reconciliation is complete (in theory by October) and SA & NICO are in sync, then they will issue another amendment to put the adjustment back in again
This topic was covered around July time when our Client had liability changed by HMRC (of course not in his favour).
Similar thing happened in January and we were lucky enough to speak to an advisor that during the phone call manually calculated the class4 nic and agreed to our calculations. I was impressed, as most newly trained HMRC staff can't do this anymore - computer says this and that's it. This lady (advisor) sounded senior, so no doubt, the proper old school HMRC staff.
You might have to call HMRC and hope you will get to speak with a knowledgeable person.