S64 carry back question re national insurance

Having a senior moment perhaps

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Sole trader making a loss in year one, having been employed as basic rate tax payer in prior and part of the current year.

Am I right in thinking that s64 relief is only available to income tax paid in employment and not national insurance.

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RLI
By lionofludesch
01st Dec 2017 11:35

No, you are not correct.

You may make a separate claim for your NI loss, a fact often overlooked.

It has to be against Class 4 but does not need to be claimed in the same way as the Income Tax loss. The options are almost identical.

If your client has not been self employed before, his only option will be carry forward.

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By David Heaton
01st Dec 2017 14:41

Yes. The Class 1 in the past employment cannot be affected by a loss carry-back or sideways set-off under tax legislation. You carry this loss forward for Class 4 purposes, against the profits of any trade (for NIC, it needn't be the same trade).

Make sure he pays the Class 2, though, despite the loss, as it is a very cheap way to secure a qualifying year for state pension and ESA purposes before the entry fee goes up with the abolition of Class 2 in 2019.

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RLI
By lionofludesch
01st Dec 2017 14:45

For the avoidance of doubt, you don't have to carry NI losses forward. It's just the most common scenario.

If your client has Class 4 paid in a self employment in the year of the loss or the three preceding years, he may have other, better options.

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