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HMRC adds guidance on the payment of Class 2 NICs deferred due to coronavirus

HMRC has updated its guidance on the self-assessment payments that were deferred due to coronavirus (COVID-19) to add information on payment of Class 2 National insurance contributions (NICs) through a Time to Pay arrangement and updated its section on paying in instalments.

HMRC’s updated guidance notes that taxpayers who deferred their July 2020 payment on account (POA), may have had the following three payments to make on 31 January 2021:

  • deferred July 2020 POA (if it remains unpaid)
  • any 2019 to 2020 balancing charge
  • the first 2020 to 2021 POA

The updated guidance explains that if the above three payments are paid by taxpayers through a Time to Pay arrangement, then the deferred July 2020 POA will be cleared first to minimise the interest that will be charged.

Where Class 2 NICs are paid after the due date of 31 January 2021, this can have a detrimental effect on certain contributory benefits claimed by taxpayers. HMRC is recommending taxpayers affected by this should contact HMRC as soon as possible since they may be able to allocate the monies paid against the Class 2 NIC instead of the July 2020 POA. This may result in a small amount of interest being paid, but the contributory benefit claim should be protected as a result.

The updated guidance also highlights that for Self-Assessment payments that were due on 31 January 2021, taxpayers can avoid the first late payment penalty if they set up a Time to Pay arrangement by 2 March 2021 and the 6 month and 12-month late payment penalties can be avoided if taxpayers pay all the tax owing under that arrangement on time

Rob Case is a Partner and heads up the Tax team here at Randall & Payne – please call 01242 776000 or email if you would like to discuss any concerns you may have.