Personal Tax- Tax comp NIC2 'Treated as paid’ & Voluntary payment missing

personal-tax-tax-comp-nic2-treated-as-paid

Personal Tax- Tax comp NIC2 'Treated as paid’ & Voluntary payment missing

6th April 2023

IRIS Personal Tax- Tax comp NIC2 'Treated as paid’ and Voluntary paid missing - 2022/2023 rules and onwards

HMRC/ PT rules for NIC2 and NIC4 from 2023 onwards started with the IRIS version 23.1. NOTE: There can be different profit threshold rules from 2023/2024 onwards, the examples below are for 2022/2023 only. Please read the HMRC rules for 2023/2024 onwards as they may change the rules for each year.

a) NIC class 4 has changed the way it is calculated (2022/2023 rules) – £11908 plus, then nic2 and nic4 is calculated. If £11908 then NIC2 is needed.

b) NIC class 2 has also changed (2022/2023 rules). If the income is between £6725 to £11908 then no NIC2 is not needed and this will show as a line ‘Class 2 NIC treated as paid = NIL’ on the tax comp. This cannot be overridden.

Added in a ‘Voluntary paid’ but its still missing NIC2 – The Class 2 NIC is not appearing in the tax calculation summary, even if the box has been ticked pay voluntarily, if the profit level is between the Small Profits Threshold of £6725 and the Lower Profits Threshold of £11908 (2022/2023 rules).
HMRC have advised the following in their SA103S/SA103F/SA104S/SA104F notes: If your taxable profits are less than £6,725 or you made a loss, you can choose to pay Class 2 NICs voluntarily to protect your entitlement to State Pension and certain benefits. You must be registered as self-employed to pay Class 2 NICs or to pay voluntarily. If your taxable profits are from £6,725 to £11,908 (2022/23 rules) you will not need to pay Class 2 NICs, your contributions are treated as having been paid to protect your entitlement to State Pension and certain benefits. This cannot be overridden. If your taxable profits are more than £11,908 you must pay Class 2 NICs (£3.15 a week).

Cannot find issue: If you have checked the steps above where the NIC2 is not showing on the Comp/SA100 and you also get a 6492 error when submitting then read this KB (under the TPV). If you have a ‘Partnership loss being used against income’ then it can suppress the NIC2 and NIC4 calculations and you will need to edit it to allow the NIC2 to be calculated again. OR you are on a later year eg 2024 etc and there are different threshold rules based on the trade profit and your client falls under it.