Personal, Business, and Trust Tax Support

Class 2 National Insurance HMRC guidance and calculations for Personal Tax

Class 2 in self-assessment

From 2015/16, Class 2 National Insurance Contributions (NIC) have been included in self-assessment and the full year's amount has been due by 31 January following the end of the tax year.

Our calculated figure for Class 2 NIC in Personal Business and Trust Tax

In Personal, Business and Trust Tax, the Class 2 NIC due and the Class 1 primary earnings are used to calculate both the Class 2 and Class 4 annual maximum for the tax year.
The Class 2 NIC due is calculated based on the number of weeks and individual has been trading in the year.
You can take the following steps to enter Class 1 primary earnings:
  1. Go to
    Edit
    ,
    Schedule Editor
    .
  2. Select
    NIC Profits Adjustment
    .
  3. Select Total employment earnings between Primary Threshold and Upper Earnings Limit
    .
  4. Select Total employment earnings above the Upper Earnings Limit
    .

Class 2 NIC due differs to HMRC's figure

HMRC have advised that if the Class 2 NIC due amount you provide provide differs to theirs, they will accept the tax return submission but will issue a repair notice using their amount to the client at a later date.
Before filing the tax return, check the HMRC's figure to make sure their calculation is correct to avoid any unexpected repair notices being issued.  HMRC have indicated you will be able to find the figure on the
View Liabilities and Payments
 portal. HMRC has also confirmed that you should be able to enter a start or end date if the figure is incorrect.

Change the Class 2 NIC figure if it's wrong in Personal, Business and Trust Tax

In the unlikely event that our calculated figure is incorrect, you take the following steps to change it:
  1. Select
    Edit
    , then
    Schedule Editor
    .
  2. Select
    NIC Profits Adjustment
    .
  3. Enter the
    Number of weeks
    .

HMRC guidance on problems with Class 2 NIC

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 HMRC will always use the figure they hold 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:
    • Total Class 2 NICs due;
    • Total Class 1 NIC chargeable earnings between the PT and UEL; and,
    • Maximum NICs Reached (this entry will display either 'Y' or 'N').
[For Individual customers (not agents) they click onto
File a Return
 (Fill in your Return) and complete their details including the new Class 2 screen (
Class 2 NI
) which will display the pre-populated Class 2 NI figure only. The
View calculation summary
 page will also display Class 2 details].
The values displayed will be one of three possibilities:
  • The amount of Class 2 NICs due
    • 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
    • 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)
    • HMRC are not aware the customer was self-employed
Or
  • 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.
    • 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).
    • 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.

This article applies to:

  • Product: Digita Personal Business and Trust Tax