With thanks to Sara White
Editor, Business & Accountancy Daily
There is a problem.
HMRC said: ‘We apologise to those affected and we’re working urgently to resolve this issue.’
The problem has arisen due to changes announced at Autumn Budget 2024, which meant that from 2024/25 onwards, self employed people receive a credit for Class 2 NICs as long as their profits are above £6,725. As a result, they do not need to pay Class 2.
Anyone with profits below this level can opt to pay Class 2 voluntarily.
The problem has been reported following the submission of a tax return for individuals who do not need to pay Class 2 (and who are not paying voluntarily) but have received one of three letters from HMRC.
In each case, the HMRC letter says that Class 2 NIC has been amended ‘in accordance with the information we hold’ but for varying amounts.
The letters
Version 1 – the Class 2 figure has been ‘amended’ to be zero – which is in line with the original submission. In this case, the letters are unnecessary.
Version 2 – a Class 2 charge of £179.40 has been added to the computation, which should not have been included and now needs to be removed.
Version 3 – a Class 2 charge of £179.40 has been added to the computation, which should not have been included, and the tax liability has been increased by double this amount.
While Class 2 NIC are voluntary, they are important to consider in the context of entitlement to the state pension.
If you have not paid enough Class 1 NIC to count as a full tax year of contributions towards benefits such as the state pension then you may want to consider paying class 2 NIC voluntarily.
The state pension depends on you having paid or been credited with sufficient NIC over your working life. You need a minimum of 10 qualifying years on your National Insurance record and usually a maximum of 35 years (but this can vary and will depend on your circumstances).
Kind regards,
Howard Gross BFP FCA FCCA CTA
Director
