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Where Taxpayers and Advisers Meet

Overlap relief

Posts: 1
Joined: Wed Jun 12, 2019 12:02 pm

Overlap relief

Postby Reamonn » Wed Jun 12, 2019 12:07 pm

I am about to claim overlap relief for the period Jan to Mar2014 (accounting year Jan to Dec) at the time I was below retirement age so therefore paid ni contributions on the overlap. I am now over retirement age and do not pay ni. Do I therefore get a refund on the ni paid in respect of the overlap profits?

Posts: 2944
Joined: Wed Aug 06, 2008 4:01 pm

Re: Overlap relief

Postby robbob » Wed Jun 12, 2019 2:12 pm

I am about to claim overlap relief for the period Jan to Mar2014 (accounting year Jan to Dec)
There is no refund due - your profits subject to tax for earlier year have not changed so there is nothing to recalculate.

You will have lower profit for tax year of relief so that would be year where things may be different - but if you are now over retirement age before this year started class 2ni is nil anyway.

Practicably speaking this makes sense - if you ceased 31/12/2018 - your last period of self employment in ye 5/4/2019 tax year is only 9 months - you will pay tax on profits for 12 months based on accounting period 1/1/2018-31/12/2018 - as this is 3 months more than your period of trading in the tax year that's why the overlap profit is deducted to get a fair (or not so as the case may be!) 9 months adjusted profit figure for the tax year.

Note generally speaking even if a recalculation was relevant then that would likely have no bearing on the class 2 ni which is paid at a fixed amount per week that you are self employed in that tax year providing you are below retirement age - so the class 2 will have been correct for each tax year based on number of weeks you were actually self employed in the tax year. I guess if a recalculation was allowed this might have affected whether you would be eligible to the exemption from paying class 2 stamp for that year so i do understand why you would ask the question.

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