Before we get into the thick of things, let us at first see what National Insurance (NI) is. Technically speaking, NI has similarities to income tax, but with a difference. Unlike income tax, NI helps to pay up for certain state benefits at times when an individual needs assistance in certain situations, like when they are unemployed, sick to work and earn, old and retired, and on bereavement.
NIC comes in 6 different varieties or classes. The type of NIC that fits in you will depend upon the situation you are in. In these cases, your accountant has a pivotal role to play in deciding upon the type of NIC that will apply to you and take steps to ensure you can benefit from it in your hour of need. That is the reason it is always advisable to be in touch with a reputed accounts service provider so it can help you out in these cases. Take, for instance, Biz Accounting Solutions Ltd. Our accountants in Reading or elsewhere will be able to service you in these emergencies, helping you to make the most out of the NIC scheme.
Now, let us discuss Her Majesty’s Revenue and Customs (HMRC) warning over Class 2 NI. For individuals who have deferred their self-assessment tax bills, the latest Class 2 NI norms might pose a lot of problems.
Persons with Deferred tax bills:
For those who are self-employed or a partner in any business, paying Class 2 NI contributions is considered a part of the self-assessment bill. Now, in case the payment is deferred, that will affect the NI record and it will not be updated. Generally, this should not pose that much of a problem. However, this year things are different. Many have taken the advantage of the COVID 19 self-assessment tax deferral scheme of the HMRC and hence, this might lead to some discrepancies.
The Class 2 NI contributions are generally considered as a part of the balancing payment of your self-assessment tax bill. Now the problem starts if and when you are not able to pay all three amounts by the deadline and if you have appealed to the HMRC to set another date for your payment – be it in person or through an online application.
What happens if and when you miss your deadline?
In that case, you might have to make a higher payment, to fill in the gap in your NI record. In that case, HMRC will send a mail to you, stating how much you will have to pay to fill in that gap.
It is, therefore, our tax advisor in Reading will take up the responsibility to come up with able guidance and help you to pay the tax bills in time.
Allocation of Payment:
Taking into account the scheme HMRC follows in allocating the payments against the tax bills, your deferred payment on account will be cleared first of all. This is actually beneficial for you, as it will minimise your rate of interest.
However, in that case, there is an underlying risk that your Class 2 National Insurance Contributions will not be entirely paid and as a result, you might miss out on some of the state benefits, which you would have otherwise qualified for.
In these cases, our tax advisor in Wokingham working for you will contact HMRC at the earliest to see if some of the payments that have already been done, could be reallocated against any Class 2 NI to prevent your loss of the right to the benefits.
The Time Frame it needs:
Hence you should ensure that your payment reaches the HMRC by the deadline. The time needed will depend upon what methods you choose to pay. You can make same-day or next-day payments by…
- Telephonic or online banking, which makes the payment faster
- By Clearing House Automated Payment System (CHAPS)
- Through your building or banking society
- By Bankers Automated Clearing Services (BACS) within 3 days
- By Direct Debit (within 21 days)
Do not worry! When you have hired us, our tax advisor in Whistley Green or elsewhere will do all the needful on your behalf.
A point to note: If your deadline falls on any weekend any national or bank holiday, ensure that your pay by the last preceding working day (provided you are not paying through Faster Payment).
Thus you see, there are so many clauses and complexities related to payment of HMRC Class 2 NIC. Only a professional and qualified tax consultant will be able to help you with the payment and related issues. Hence, putting stakes on us at Biz Accounting Solutions Ltd will be immensely beneficial. For further details, call us at 44 7877224964 or 01183 671854 during our operation hours.