Terminal loss and carry back of Class 4 NIC

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I have a terminal loss for the tax year 23/24 which I am carrying back to the 20/21 tax year for Class 4 NIC purposes.  My client was exempt from paying Class 4 in the 21/22 & the 22/23 tax year due to hitting retirement age. 

I can adjust for the tax implications of the terminal loss but I cannot see how to adjust for the Class 4 NIC.  Anyone had this problem before?

Thanks   

Replies (5)

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By Not Anonymous
15th May 2024 18:23

Is it not a case of re-calculating the Self Assessment liability for 2020-21 with the terminal loss included and entering the difference between the existing 2020-21 liability and what it would be if the return could be amended to include the terminal loss relief in the relevant box on the 2023-24 return?

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Replying to Not Anonymous:
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By Gabrielle
15th May 2024 18:37

I thought that but on the SA100 as my tax losses go in the box " Adjustments to tax due - decrease in tax due because of adjustments to an earlier year"

I assumed that the Class 4 NIC would go in the box "adjustments to profits chargeable to Class 4 NIC" but this does not reduce their liability.

So I am a little confused how and where to put it.......

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Replying to Gabrielle:
RLI
By lionofludesch
15th May 2024 20:10

Include it with the tax reduction and attach a computation to the return.

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Replying to Gabrielle:
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By Not Anonymous
15th May 2024 20:23

Gabrielle wrote:

I thought that but on the SA100 as my tax losses go in the box " Adjustments to tax due - decrease in tax due because of adjustments to an earlier year"

I assumed that the Class 4 NIC would go in the box "adjustments to profits chargeable to Class 4 NIC" but this does not reduce their liability.

So I am a little confused how and where to put it.......

In your op you said you were carrying it back for Class 4 NI purposes.

Do I take it you are actually carrying it back from Class 4 NI and tax purposes?

And I don't know what relevance the ""adjustments to profits chargeable to Class 4 NIC" box has if you are making a carryback claim?

A loss carryback claim wouldn't alter the Self Assessment liability, it gives rise to a credit separate to the Self Assessment liability of either the tax year the loss arise in or the tax year it is being carried back to.

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Replying to Not Anonymous:
RLI
By lionofludesch
15th May 2024 21:29

Agree with Not.

You don't make an adjustment to profits for Income Tax and you don't do it for C4NIC either. You work out how much tax and NI you've overpaid and stick it in the tax overpaid box.

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