This section is available from the data input tab within the tax return and is used to make adjustments to Class 2 and Class 4 National Insurance Contributions. From 2016 HMRC will be collecting both Class 2 and Class 4 NIC through Self Assessment.
Non-residents and those over state pension age are exempt from paying Class 4 NIC. If the tax payer is exempt from paying Class 4 NIC because of their age, and their date of birth and gender have been correctly entered, then there is no need to complete this section; Taxfiler will recognise that the tax payer is exempt and ensure that the Tax Return and computation are correct.
If the tax payer is self-employed and is not exempt then Class 2 and Class 4 will be calculated automatically based on the profits for the year. If profits are below the Small Profits Threshold for Class 2 Contributions (current rates) then you can use this screen to indicate that the taxpayer wishes to make voluntary Class 2 contributions.
There are a number of forms in which this information can be included: Self-employment (full: SA103F, short: SA103S); Partnership (full: SA104F, short: SA104S) and the Lloyd’s Underwriter form (SA103L). HMRC require that the information be provided only once; Taxfiler will include the information on the first relevant form of the Tax Return.
Class 2 & Class 4 NICs
- ‘Tick if excepted from paying Class 4 NICs‘ Tick the box if the client is excepted from paying Class 4 NIC for any reason.
This section allows you to make an adjustment to trading profits for NIC purposes.
- ‘Net trading profits for the year’ This field displays the net trading profits for the year based on self-employment and partnership income entered.
- ‘Adjustment to profit chargeable to Class 4 NICs’ Enter any adjustment to reduce the profits chargeable to NICs
- ‘Profits on which Class 2 and Class 4 NIC is due’ This field displays the trading profits after adjustment. This figure is used to determine whether Class 2 and Class 4 NICs are payable.
Class 2 National Insurance
- ‘Small profits threshold for current year‘ This field displays the Small Profits Threshold amount for the year. Taxfiler will determine whether Class 2 contributions are required.
- ‘Choosing to pay voluntary Class 2 NICs?’ If Class 2 contributions are not required but the client has chosen to make voluntary contributions, tick this box.
- ‘Are you a share fisherman?’ There is a higher rate of Class 2 for share fishermen. Tick this box if the client is required to pay the higher rate.
- ‘Date started self-employment (if during year)’ If the client started self-employment during the year, enter the date here.
- ‘Date ended self-employment or reached retirement age (if during year)’ If the client stopped being self-employed during the year, enter the date here.
- ‘Calculated amount’ This field will display the calculated amount of Class 2 Contributions for the year.
- ‘Enter a figure to override the calculated amount (optional)’ Use this field to override the calculated figure, otherwise leave the field blank.
Class 4 National Insurance
This section displays the calculation of Class 4 Contributions for the year BEFORE limiting the contributions to the Class 4 Maximum Charge.
Class 4 National Insurance maximum charge
If a tax payer is both employed AND self-employed, Class 4 Contributions may be reduced because of Class 1 and Class 2 contributions made in the year.
Enter the required details from the P60. If you have more than one P60, add up the figures for all employments. Taxfiler currently has the two fields below, either can now be used.
- ‘Earnings above the Primary Threshold, up to and including the Upper Accrual Point‘
- ‘Earnings above the UAP, up to and including the Upper Earnings Limit (UEL)’