Class 2 NI

System
System Posts: 100,537 🤖 Admin 🤖
edited June 9 in General accounting discussion
Hi
My client is in full time employment as well as running his own small business. In 2005/06 he paid Class 2 NI, but expected his profits in 2006/07 to be around £3k, so he applied for the small earnings exemption. I have just done his accounts and his profits are closer to £5k, so he will be liable to pay his class 2's, but I can't see how he goes about doing this. Is there a form to fill in or should he just write to the National Insurance office explaining the situation and enclosing a cheque?
I hope someone knows as I hate phoning them!!
Thanks
Jodie

Comments

  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Class 2 NI

    I'm not sure if there is a form to fill in but the NIC office will eventually discover the underpayment and chase your client. I'd suggest ringing the NIC office, explaining the situation and arranging for the underpayment to be rectified.

    Kind regards
    Steve
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Class 2 NI

    looks like i'll have to make that call...
    ta
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Class 2 NI

    Hi Jodie

    Just in case you haven't already phoned them, if his earnings were low he should have been sent a certificate of exemption. This is valid until the expiry date - regardless of circumstances changing.

    Years ago I had one, and when my earning went over the threshold I phoned and was told not to do anything - so I didnt, and then started paying when the cert ran out - and I have never been chased for them.

    Claudia
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Class 2 NI

    Hello
    Thanks so much for that Claudia - I'm still waiting for something from the client before i can complete his tax return so I had put off calling the NI office. I'm so pleased to hear that :D
    Jodie
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Class 2 NI

    I agree with Claudia.

    If you do not apply for exception and your profits later turn out to exceed the threshold then they will recoup the NI that should have been paid.

    If you apply for exception and it is granted then they will not recoup the NI if your profits then actually exceed the small earnings threshold, unless they believe you made a fraudulent application.

    They usually issue an exception certificate that lasts for two years so if you want to start paying NI before then end of the exception period (perhaps to secure state pension/benefit entitlement) then you will need to submit the direct debit mandate form (CA5601).

    If earnings from full-time employment are significant then an application for deferment of both class 2 and class 4 can be made using form CA72B.

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