Talking to your clients: Class 2 NIC

Taxpayers whose net profits are below the 2019/20 Small Profits Threshold (£6,365) were not liable to pay Class 2 NIC but could pay voluntarily to protect their contributory benefit entitlement. HMRC’s processing rules didn’t allow for voluntary Class 2 to be included in returns filed after 31 January 2021.

Returns received after 31 January 2021 were automatically amended to remove the voluntary Class 2 so payments made for voluntary Class 2 will have been:

• allocated to other Self Assessment liabilities (including earlier outstanding amounts)
• held in Self Assessment as a credit
• put towards their Payment On Account 1 for 2020 to 2021
• refunded to the customer

Approximately 1 million taxpayers did not file their return by 31 January 2021 and are being advised to contact HMRC to discuss details of an alternative way to resolve this issue.

Obviously, if taxpayers take no action, they may have gaps in their National Insurance record. Full details can be found here. 

How we can help

We will discuss this, alongside other developments in taxation in our Autumn Tax Update. Taking place as both a Mercia Live course, and across various UK venues, the course will review developments and planning points on:

• Business and corporate tax
• Personal tax
• Employment issues
• Capital taxes
• Administration and other taxes