Help Needed. Tax Return Query: NICs

PasturesNew

Just filling out my 2008-2009 Tax Return online and it's asking if I am exempt from Class 4 NICs. It seems to indicate that to be exempt I have to be out of the country, over 65 or under 16. None of these apply.

I pay Class 2 NICs. That's all I thought I paid. Class 2 for self-employment, when employed the payslip sorts it out... so I just pay Class 2.

So, it seems I should choose "NO", but then my tax bill seems to be massive. When I get to the end of the online process and choose to View, it's coming up about £700 more than I expected, so I am wondering if I should say "Yes, I am exempt".

I didn't expect this question.

In 2008-2009 I was:
- Employed, for 1 week.
- Self-employed, for 52 weeks.

What have I not understood? What have I done wrong?

I can't have had this question last year or I'd know the answer this year...

sandiep

Self employed you are liable to class 2 and class 4. So yes, unfortunately it looks like your tax bill is £2k bigger than you thought.

Class 1 is for employment income, and these will have been deducted at source, if relevant.

PasturesNew

Ah - it's also charging me for tax on savings interest, which has already been paid through the banking system .... damn....

So that's something else that's not right. I'll have to look into that too.

Edit: Ah, interest is fine, they added that on then took that off.

It's just these Class 4's that are putting it out by £700 now.... and, of course, they want "payment on account" for 2009-2010 which makes the whole bill look scarey

Mikeyorks

Sorry - you can't say you're exempt otherwise you'll be liable to interest etc when caught up with. From HMRC :-

If you're self-employed you pay Class 2 and Class 4 National Insurance contributions. The rates are as follows:

• Class 2 National Insurance contributions are paid at a flat rate of £2.40 a week
• Class 4 National Insurance contributions are paid as a percentage of your annual taxable profits - 8 per cent on profits between £5,715 and £43,875, and a further 1 per cent on profits over that amount

Mikeyorks

PasturesNew wrote: »

Ah - it's also charging me for tax on savings interest, which has already been paid through the banking system

You need to put down the gross interest ..... also the tax deducted. So it does a recalc base on your overall income ..... but then gives you credit for the tax deducted on interest.

PasturesNew

sandiep wrote: »

Self employed you are liable to class 2 and class 4. So yes, unfortunately it looks like your tax bill is £2k bigger than you thought.

Class 1 is for employment income, and these will have been deducted at source, if relevant.

I thought (spotted it for the first time today), that Class 4 was the 8% over £5k or so, which comes in for 2009-2010... and I am doing the return for 2008-2009.

PasturesNew

Mikeyorks wrote: »

You need to put down the gross interest ..... also the tax deducted. So it does a recalc base on your overall income ..... but then gives you credit for the tax deducted on interest.

The form asked for the nett figures. I've gone past "view" to "print it out" and on there I can see they've counted it in, then knocked it off. So interest part is sorted now and all OK.

I know I did that bit correct for what they were asking, just the way they lay it out on the screen isn't user-friendly

Thanks.

sandiep

Also, make sure that you've included the tax and NIC deducted from your employed income, and any payments on account that you made in January 09 and July 09.

sandiep

PasturesNew wrote: »

I thought (spotted it for the first time today), that Class 4 was the 8% over £5k or so, which comes in for 2009-2010... and I am doing the return for 2008-2009.

Nope, class 4 has been around for a good few decades. It may have been not payable previously if profits were below that certain level, but it's always been payable for profits over the LEL.

PasturesNew

Ah. OK. Right. Better crack on and pay up now then

Thanks for the help.

System

sandiep wrote: »

Also, make sure that you've included the tax and NIC deducted from your employed income, and any payments on account that you made in January 09 and July 09.

The tax return doesn't ask for the NIC deducted from the employment income and the POA do not have to be included on the tax return itself.

Submitting the tax return results in a calculation of the 2008/2009 total liability. 24 hours after submitting the return online you can go back online and view your SA account and any POA made in Jan and July 09 will have been taken into consideration at that point.