Interaction of Class 2 NI and Basis Period Reform

Can't ascertain if client needs to voluntarily pay Class 2

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I've just run a 2023/24 tax return using Taxcalc for a client who needs to change their year end date due to basis period reform.

Very low income and even if she doesn't spread the additional profit over 5 years, there's no liability to Income Tax nor Class 4 NI.

The profit pre basis period adjustments is £6280 and the additional basis period reform profit £1288

If I enter that I want to spread the additional profit, an additional £257 is shown as taxable further down the SA302 equivalent on Taxcalc. Taxcalc correctly doesn't flag up she is getting credit for Class 2 as still below the threshold.

If I enter that I want to NOT spread the additional profit, £1288, TaxCalc does then flag up that she is getting credit for Class 2. But the additional £1288 again is further down the calculation as Tax Due on £1288, £0.

I am just concerned that if this is an additional tax charge (though none due in this case) why is she now showing as getting credit for Class 2?

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By AdamJones82
15th Jun 2024 22:54

Ignore the post, I found if I run the separate summary within Taxcalc's reports, just for NI, it shows the transitional profit is included for NI.
It's just the wording of the SA302 which made it initially unclear.

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