NIC Help

System
System Posts: 100,537 🤖 Admin 🤖
edited June 9 in General accounting discussion
Hello,

Please help me with the below

ALL RELATED TO 2005/06 TAX YEAR (SELF EMPLOYED)

If some one has employment income £3922 AND HAVE PAID £581 TAX.

Then they give up employment and are now self employed and have taxable profits of £4547.

I know they have paid too much tax and are due a refund.

But how does NIC fit into this? dO THEY NEED TO PAY ANY AND IF YES UNDER WHAT CALCULATIONS?

And do we have to claim capital allowances, even if it does not benefit the tax payer?
PLEASE HELP AS I AM ABIT RUSTY.

Comments

  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:NIC Help

    NIC is non cumulative - it is collected as a percentage using defined periods and set earnings levels. It would be very unusual to have overpaid NIC because of the way it is collected.

    Hope this helps.

    Sarah
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:NIC Help

    Yeah, I'm no expert on NIC so someone correct me if I get it wrong here, but the NIC deducted from employment income won't be refundable. The client wouldn't have to have paid class 2 NIC as their profits are below the threshold, but they may want to pay this so as not to loose entitlement to state benefits. If they don't pay Class 2's they'll need to apply for exemption to keep things straight.

    And regarding capital allowances, you're right, you can 'defer' claiming them until they're going to be of use.
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:NIC Help

    Jodie is right - NICs on employed earnings are "non refundable". Class 2's are £2.00ish per week, and Class 4 are 8% of profits.

    Claudia
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:NIC Help

    thanks for replies,

    So for the above, if he has paid NIC in employment, they are non-refundable.

    But am I right in saying that since he got self employed and made profit below threshold , there are no Class 4 NIC due. Or do I have to include employment income in NIC class 4 calculations.

    Thanks
    H
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:NIC Help

    No - only s/e income for Class 4 contributions.

    Claudia

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