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Checking calculations for self-employed national insurance contributions

Caroline Miskin alerts ICAEW members to some difficulties in the collection of class 2 and class 4 national insurance contributions through self assessment in 2015/16

ICAEW members are continuing to report that HMRC’s self assessment (SA) calculations for 2015/16 show, in a significant number of cases, incorrect figures for class 2 and class 4 national insurance contribution (NIC) liabilities. HMRC calculations for 2015/16 should be checked carefully.

The NIC liability is determined by the information held in NPS (HMRC’s National Insurance and PAYE system) and this overwrites any figures that an agent or taxpayer reports on an SA return, even if the return is correct. Entries on the SA return do not update NPS – commencements and cessations of self-employment must be reported separately. HMRC has been issuing amended calculations which do not agree with submitted returns.