HMRC has provided a further update on the ongoing calculation issues with 2024/25 Class 2 National Insurance Contributions (Class 2 NICs) which you can read more about below. In other miscellaneous news this week:
- In a Press Release, HMRC is urging anyone with a side hustle to check if they are self-employed and need to register for self-assessment,
- The Institute for Fiscal Studies says the tax system is making net zero more costly than it has to be,
- The minutes from the most recent meeting of the HMRC forum, the Joint Vat Consultative Committee are available,
- As we reminded you last week, today, Monday 30 June 2025, is the deadline to register to report for Pillar Two in the UK. HMRC has recently updated its guidance on this,
- HMRC’s latest News and Information Bulletin is available on our website,
- The latest schedule of HMRC Talking Points live and recorded webinars for tax agents is available for booking. Spaces are limited, so take a look now and save your place, and
- Check HMRC’s online services availability page for details of planned downtime and the online services affected.
Update on Class 2 NICs issue
Last week we updated you on the ongoing Class 2 NICs issue which has resulted in incorrect tax calculations being issued to some taxpayers for 2024/25. HMRC has asked us to share an update on this issue which confirms that agents who receive incorrect calculations for clients “should not need to take any further action” as HMRC continues to work on a fix. The full update from HMRC is as follows:
“We’re working to resolve the issue which we became aware of on 9 May affecting some Self-Assessment taxpayers in relation to Class 2 National Insurance contributions for the last tax year.
The nature of the error depends on individual circumstances, but in general, customers with self-employed profits above £12,570 have seen Class 2 NICs charge of £358.80 added to their accounts when they shouldn’t have been, although in some circumstances it will be less.
We’ve already taken action to correct the Class 2 NICs figure in circumstances where the information we hold has allowed us. If this applies to your clients, they will have received a message to let them know. We will correct the records of other customers after the issue has been resolved and again, notify them when we have done so, so there is no need for customers to contact us.
We are expecting to have the issue resolved by the end of July at the latest and will be correcting records before any incorrect amounts due impact the tax owed for 2024–25. While we understand this may be concerning, we want to reassure you that there should be no long-term impact.
We’d also like to reassure you that customers who may have made a payment will either be refunded or have a credit added to their Self-Assessment statement.”
We are also aware that some taxpayers may have received letters telling them to object to the computation within 30 days of receipt (which some agents may also be aware of) and that incorrect Class 2 NICs calculations are continuing to be sent by HMRC even though it is working on a fix. In addition, there are scenarios where agents have correctly filed 2024/25 returns showing no Class 2 NICs liability after which they have subsequently received a letter from HMRC to say they will be correcting this when in fact the correction too is showing no Class 2 NICs liability.
In response to this HMRC says:
“The 30-day limit can be ignored for impacted self-employed customers as they’ll be issued with a new SA302 tax calculation letter - which is when a new 30-day limit will commence. Unfortunately, existing incorrect Class 2 letters will continue to be issued until the fix is in place, but we are pushing for this to be done earlier than the end of July estimate we’ve been given.
We believe that this issue is also the cause of instances where a letter is received by an agent after they have filed a return correctly (showing ‘nil’ NICs), stating that their return has been ‘corrected’ to ‘nil’. This requires a slightly different fix, but it will be carried out to the same July timescale. There won’t be any new letter issued following the fix in these circumstances as there’s no correction to be made, but we appreciate that it is confusing to receive a letter which confirms the NIC but is branded as a ‘correction’. The fix will stop these letters.”
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