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Where Taxpayers and Advisers Meet

NI when both employed and self employed.

someone
Posts:432
Joined:Mon Feb 13, 2017 10:09 am
NI when both employed and self employed.

Postby someone » Mon Sep 28, 2020 9:54 am

If the employment income is above the LEL then is there any need/benefit to paying class 2 NI for self employment?

A friend is confused because they're never previously been asked to pay class 2 NI. They have recently made a voluntary payment for an incomplete year from a few years ago where they were not working at all for part of the year but their 19/20 tax return is now asking them to pay 159 of class 2 NI for the 19/20 tax year.

My googling suggests that they should tick a box somewhere to defer class 2 contributions as they will already qualify for a full year of NI based on their employment earnings. Is this correct?

robbob
Posts:3024
Joined:Wed Aug 06, 2008 4:01 pm

Re: NI when both employed and self employed.

Postby robbob » Mon Sep 28, 2020 10:33 am

If the employment income is above the LEL then is there any need/benefit to paying class 2 NI for self employment?
Probably not -certainly not that i can think of presuming the employment is sufficient to qualify for stamp for the full tax year.

A friend is confused because they're never previously been asked to pay class 2 NI. They have recently made a voluntary payment for an incomplete year from a few years ago where they were not working at all for part of the year but their 19/20 tax return is now asking them to pay 159 of class 2 NI for the 19/20 tax year.
The £159.00 is mandatory payment if sole trader profits exceed £6,365 (19/20) (presuming maximum NI all sources limit not breached)

Below £6,365 profit sole trader profit class 2ni is voluntary.

Note class 2ni whether paid via force or choice should not be confused with Class 3 voluntary stamp payments and the individual needs to do full chapter and verse resarch wise to ensure they make the correct choice. Normally i would expect class2NI voluntary stamo would be cheaper than the class 3 if one if paying one of teh two and has the choice of paying either.

Final note hmrc computers have been known to wrongly remove class 2 and or class 4NI due from calculations made - so the individual should always ensure the class2NI indicator on hmrc online is correct so that hmrc are not incorrectly adjusting out class2 ni due - eg if they incorrectly have cessation of trade date or no start date.

someone
Posts:432
Joined:Mon Feb 13, 2017 10:09 am

Re: NI when both employed and self employed.

Postby someone » Mon Sep 28, 2020 10:50 am

Many thanks. That makes as much sense to me as NI ever has!

robbob
Posts:3024
Joined:Wed Aug 06, 2008 4:01 pm

Re: NI when both employed and self employed.

Postby robbob » Mon Sep 28, 2020 11:38 am

Many thanks. That makes as much sense to me as NI ever has!
Ie none - presumably :)


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