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Any Answers Answered: Class 2 NICs and property allowance

5th Jul 2019
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In this action-packed episode of TaxTV, genial hosts Giles Mooney and Tim Good answer AccountingWEB reader questions on Class 2 national insurance and property allowance.

To view the full questions and AccountingWEB reader answers click on the links below:

For the latest episode of TAXtv visit PTP Interactive. TAXtv is a monthly tax update programme available as an annual subscription from £199, (11 issues plus special editions) to view online, download from the internet or watch on DVD.

Replies (2)

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By SteveHa
07th Jul 2019 08:35

It's appalling that HMRC and DWP still do not communicate re NIC.

However, on the second question (and I haven't looked at the legislation) but if the property allowance is denied where the rent is received from a close company in which you are a participator, would that mean that a non-shareholding director could claim it, whilst a director/shareholder couldn't?

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By David Heaton
09th Jul 2019 11:55

The HMRC SA system is on a different computer from the NIC system, but both are HMRC systems. The DWP manages pensions, but not Class 2 NI records, which became the responsibility of HMRC when HMRC absorbed the Contributions Agency two decades ago. There is really no excuse for HMRC's separate systems not talking to each other about Class 2, after so many years of HMRC running both systems. You have to suspect that nothing has been done to synchronise the two systems because HMRC wants to abolish Class 2, so any investment in linking the two would be wasted as soon as that happens.

As to the question of whether a part-year Class 2 record gets you a full year's pension entitlement, the answer is 'no'. Each week of Class 2 paid is equivalent to paying or being credited with Class 1 at the LEL for that week. If you pay Class 2 for six months, you need to pay voluntarily (Class 2 or 3) for six months, or have earnings at the LEL for six months under Class 1, to make the year qualify (or some permutation of those options).

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