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TonyTax
TonyTax, Tax Consultant
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A non-registered Class2 NICs self employment. Assistant:

Resolved Question:

A non-registered Class2 NICs self employment.
Assistant: Thank you. Can you provide any more details to help us find you the right Expert?
Customer: Can I ask who pays for sponsors your site? It seems to good to be true!
Submitted: 10 months ago.
Category: Tax
Expert:  TonyTax replied 10 months ago.

Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.

Expert:  TonyTax replied 10 months ago.

Can you tell me what your question is please.

Customer: replied 10 months ago.
Every year I complete a tax self-assessment form in which I report my PAYE employment. To this I add, as self-employment, details of fees paid for lectures and consultancy work, when these have been paid directly to me, rather than to my employer. Tax on these additional earnings has generally been paid at additional / higher rate.
I’m mortified to now discover that I should have registered this self-employment at the outset, separately from my tax return and therefore should have been paying Class 2 NICS. I wrongly believed that sending my first self-employment tax return was the correct way to notify HMRC and wasn’t aware of the additional requirement to register separately. The first return would be 1985-90. I don’t have records that far back.
Because Class 2 NIC liability never subsequently appeared in my annual tax calculation I didn’t realise that it should be being paid.
The fact that I saw Class 4 NICs sometimes being charged when my self-employment income was above a certain level (four out of the six years between 2010/11 -2015/16) compounded my view that I was paying NICs correctly. Again I now realise that this was incorrect.
Please can you tell me what I need to do to rectify this mistake? I feel extremely stupid since I always try hard to deal correctly and on-time with all of my tax affairs. This matter only came to light for me when I was paying my 2015/16 annual account on-line last week and saw the information about the new way of deducting Class 2 NICS.
Like most people who write one of these letters I suppose, I am extremely anxious about the consequences and I am eager to help to put matters right. Please can you advise me what I need to do next.
Specifically how much is the tax man likely to want from me, and will I lose my state pension contributing years built up on my Class 1 NICs?Thanks.
Expert:  TonyTax replied 10 months ago.

Where in your tax return did you enter your lecture and consultanyc work income?

Customer: replied 10 months ago.
In the self-employment section.
Expert:  TonyTax replied 10 months ago.

Click on the fifth link in the seartch results here. That will give you the weekly Class 2 NIC rates back to 1977. Class 2 NIC is due to be abolished. Look here to see what benefits the different classes of NIC give you access to.

How all the different elements of NIC affect your state pension is far to complex to go into here. You won't lose what our Class 1 payments have built up. What I suggest you do is apply for a state pension forecast based on what you have paid. You can do that here. You should get an immediate on screen result followed by a letter from the Department of Work and Pensions.

Normally, if you are behind with Class 2 NIC, you get chased up but as you didn't register as self-employed I guess that's the reason why you appear not to have been chased up. It's odd that HMRC didn't pick up the fact that you hadn't registered and didn't ask you to complete the relevant forms.

You have a couple of options. Do nothing or call HMRC and tell them that you have never paid Class 2 NICs. They will then probably tell the DWP and you will get a letter telling you what you owe. In the old days, there was an upper limit to NIC that you could pay between the different classes. Now, it is different. If I were you, I'd call HMRC and get the matter straightened out.

I hope this helps but let me know if you have any further questions.

Expert:  TonyTax replied 10 months ago.

Try the fourth link on the search here for the Class 2 NIC rates too.

Customer: replied 10 months ago.
Thanks. Can they really go back so many years or are they limited to the last 6?
Customer: replied 10 months ago.
can they charge interest or penalties? Best to know before I launch down this route.
Expert:  TonyTax replied 10 months ago.

My understanding is that interest is not charged on late Class 2 NIC contributions but that where the contribution is 12 months late, you pay at the prevailing rate which is now £2.80 per week.

Expert:  TonyTax replied 10 months ago.

To be honest, I've never see them go back 30 years but the Treasury is desperate for cash so you never know.

Customer: replied 10 months ago.
How would we establish when it began? Do HMRC keep their records that long?
Expert:  TonyTax replied 10 months ago.

It's up to you to tell HMRC when you started being self-employed. Much of the old records will be archived on microfiche.

Customer: replied 10 months ago.
Ok. Thanks for the help.
Expert:  TonyTax replied 10 months ago.

Thanks and good luck.

Would you mind rating my answer before you leave the site please.

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Expert:  TonyTax replied 10 months ago.

Thanks.