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Why are HMRC removing the class 2 charge and correcting my tax calcs?

SA302's being issued with corrected tax calc.

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Hello, am I doing something obviously wrong here?

Recently submitted two ITR's for self-employed. In the simplier case to explain they commenced trade 06/04/2015 and profits above lower earnings limit.

Taxfiler automatically includes a charge for £145.60 - full years class 2 NI.

HMRC then issue a SA302 revised Tax Calc removing the full years class 2 NI.

Of note, the client did recently pay a one-off NI bill of £2.75 itemised as for the period 05/04/2015 - 11/04/2015.

This being the second occassion and I've only so far submitted a handfull of ITR's I thought I best check that if I'm doing something obviously wrong? Should I have known that the client doesn't have an class 2 NI liability for 2015/16?


Replies (7)

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By The Highlander
03rd Jun 2016 14:32

There is a small profits threshold of £5,965 in 2015/16. If they are not earning above this threshold then no Class 2 liability is payable for the year.

If this is not the case for the two that have been returned then I'm unsure of the reason.

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Replying to The Highlander:
By chewmac
03rd Jun 2016 14:40

Thank you but both are earning above the small profits threshold.

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Out of my mind
By runningmate
03rd Jun 2016 14:40

You are right. HMRC are wrong. It's that simple.

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Replying to runningmate:
By chewmac
03rd Jun 2016 14:42

You're kidding me! Please tell me I'm wrong. Anyone had similar experience?

So, receive SA302, call client, call HMRC, email client etc etc!

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Replying to fawltybasil2575:
By chewmac
03rd Jun 2016 15:21

Thanks very much Basil. I've now read your suggested letter via that link. I might try that!

Thanks to others too. What a situation!

And my final grip, I can't post a post without one at the mo - I wouldn't have missed that previous post if this site was at all appealing to visit anymore. Never mind the fact that never know which post I have, haven't read anymore. I miss the simple list presentation.

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By Paul D Utherone
03rd Jun 2016 15:36

As others have mentioned HMRC have advised apparently that they do not want software providers or Agents to calculate the Class 2 NIC figure themselves, but instead to use the figure provided on client’s SA accounts.

Their guidance is:
SA - Class 2 NICs Further Information
It has come to light that there have been instances where Class 2 NICs amounts have been unexpectedly repaid as HMRC records do not show any liability payable. Please note that the system will always use the HMRC system held figure rather than the amount submitted in the return.
To check the Class 2 NICs figure:

Agents can select the following entries (Self-Assessment > Your current client):
• "Tax Return Options" (from the choices on the left hand side of the screen);
• "File Return" (the new Class 2 screen which will display the pre-populated Class 2 NI figure).

"From the Self-Assessment > Your current client > Tax Return Options" page, the Agent can click on:
• "Information to help complete your tax return".
• "Additional information" this displays three NI items:
o Total Class 2 NICs due;
o Total Class 1 NICable earnings between the PT and UEL; and,
o Maximum NICs Reached (this entry will display either 'Y' or 'N').

The values displayed will be one of three possibilities:

• The amount of Class 2 NICs due
o this will be greater than £0 (zero) and in most cases will not exceed £145.60 based on the most up to date information HMRC hold;
• Zero figure displayed
o Maximum NICs has been reached ("Additional information" screen displays 'Y' next to 'Maximum NICs Reached')
• No figure is displayed only text stating 'Not available' (two options could apply here)
o HMRC are not aware the customer was self-employed
o The amount will automatically be corrected when the Return is submitted; they will receive an SA302 Tax Calculation showing the Class 2 amount that has been included.
If the Agent disagrees with the figure:

• They should telephone or write to HMRC to advise of a new / revised start or end date to self-employment, or, by e-mail through Gov.UK to register or cease self-employment.

• Other scenarios which could impact the figure are customers having claimed a benefit such as ESA, Incapacity or Maternity Allowance; or they were abroad, or they have reached State Pension Age, and HMRC were not aware. They would need to let HMRC know the circumstances.
o In most cases HMRC would have been aware of these circumstances and the amount of Class 2 due would have been calculated accordingly.

• If "Not available" is displayed it is possible their client is not registered as self-employed for National Insurance and they need to register them. Once they are registered the Class 2 value will appear on the tax return (timescale depends on the method used to register).
o If the Agent knows their client is registered they can submit the Return without the Class 2 figure. They will receive an SA302 Tax Calculation showing the Class 2 amount that has been included. If they wish to know the Class 2 figure in advance of submitting the Return they should call HMRC.

Apparently there is a WT Webinar on Class 2 on 15 June re Class 2 -

Thanks (3)
Replying to Paul D Utherone:
By chewmac
03rd Jun 2016 19:02

Thank you, that's a very helpful reply.

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