Class 2 and 4 NIC section (SA100)

This section is used to make adjustments to Class 2 and Class 4 National Insurance contributions.

Non-residents and those over state pension age are exempt from paying Class 4 NIC. IRIS Elements identifies any tax payer exempt from paying Class 4 NIC based on their age, date of birth and gender (providing these have been entered correctly) and ensures the computation and return are correct. Refer HMRC's national insurance manual.

If the tax payer is self-employed and is not exempt then Class 2 and Class 4 will be calculated automatically based on the profits for the year. If profits are below the current rates for Small Profits Threshold for Class 2 Contributions, can use this section to indicate that the taxpayer wants to make voluntary Class 2 contributions.

Where a taxpayer has paid Class 1 National insurance on employment income an automatic adjustment will be made to the Class 4 contributions due where appropriate. This is called the Regulation 100 calculation.

There are a number of forms in which this information can be included:

  • Self-employment (full: SA103F, short: SA103S)

  • Partnership (full: SA104F, short: SA104S)

  • Lloyd’s Underwriter form (SA103L)

HMRC require that the information is provided only once. IRIS Elements Tax and Accounts includes the information on the first relevant form of the tax return.

  1. Go to Clients > Client List and find the required client.
  2. On the Self assessment returns widget on the client dashboard, select the required return. The Status tab is shown by default.
  3. Select the Data input tab, then select Add new section.

    Any previously added sections are crossed through. Once added, the section can be edited by selecting its name.

  1. On Choose a section to add, under Trade/profession or vocation, select Class 2 & Class 4 NIC.

  2. If the section is crossed through, it has already been added to the tax return. To adjust it the existing values, close the window and select the section on the Data Input tab.

  3. Complete the information as follows, then select Save changes.

Class 2 and Class 4 NICs

Tick if excepted from paying Class 4 NICs - select if the client is excepted from paying Class 4 NIC for any reason. You will then need to select a Reason for exemption from the list.

The exemption is automatically set if all the information such as date of birth and residence status is known as follows:

  • Under 16 – age of taxpayer is less than 16.

  • Over state pension age – age of the taxpayer is over 65 at the beginning of the year.

  • Non-resident – the individual is non-resident for the tax year. This code will also be selected if either of the age related codes would apply.

Trading profits

This section allows you to make an adjustment to trading profits for NIC purposes.

  • Net trading profits for the year - displays the net trading profits for the year based on self-employment and partnership income entered.

  • Adjustment to profit chargeable to Class 4 NICs - enter any adjustment to reduce the profits chargeable to NICs

  • Profits on which Class 2 and Class 4 NIC is due - shows the trading profits after adjustment. This figure is used to determine whether Class 2 and Class 4 NICs are payable.

Class 2 National Insurance

  • Small profits threshold for current year - shows the Small Profits Threshold amount for the year. IRIS Elements Tax and Accounts will determine whether Class 2 contributions are required.

  • Choosing to pay voluntary Class 2 NICs? - select if Class 2 contributions are not required but the client has chosen to make voluntary contributions.

  • Are you a share fisherman? - there is a higher rate of Class 2 for share fishermen. Select if the client is required to pay the higher rate.

  • Date started self-employment (if during year) - if the client started self-employment during the year, enter the date here.

  • Date ended self-employment or reached retirement age (if during year) - if the client stopped being self-employed during the year, enter the date here.

  • Calculated amount - shows the calculated amount of Class 2 Contributions for the year.

  • Enter a figure to override the calculated amount (optional) - use this field to override the calculated figure, otherwise leave the field blank.

Class 4 National Insurance

This section shows the calculation of Class 4 Contributions for the year before limiting the contributions to the Class 4 Maximum Charge.

Class 4 National Insurance maximum charge

If a tax payer is both employed and self-employed, Class 4 Contributions may be reduced because of Class 1 and Class 2 contributions made in the year.

Enter the required details from the P60. If you have more than one P60, add up the figures for all employments.