Self Employed Tax And National Insurance deductions

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  • #22911
    bmassie1
    Participant

    Hi ,

    I’m wondering if you can give your opinion of the use of Notional Tax and National Insurance Contribution allowances when calculating a new set of accounts for a Self Employed person.

    I was under the impression that we should use the current Tax and N/I allowances prevalent at the time of assessing the new accounts, irrespective of the period the accounts cover, is this correct? and do you know of any regs or guidance which is a bit more articulate?

    Ward & Zeb and the Regs appear to give direction of using the the rates at the “date of claim” but does not cover change of circumstances or when re-assessing income from self employment say following an intervention

    Thanks .

    #10155
    Anonymous
    Guest

    The Regs say you should use the tax allowances that applied during the assessment period i.e. the period over which the income was earned, not the period over which benefit is awarded. This is flawed in my view for two reasons:-

    – the object of the game with self-employed earnings is to predict what the claimant’s income will be during the benefit award, so it seems more logical to use the tax rates that apply while HB is being paid;

    – the Regs don’t help in cases where the assessment period spans two tax years

    But that’s what the Regs say, workable or not

    #10156
    gerryg
    Participant

    HB Reg 39 (and its equivalents in the other regs) says that the tax and NI rates to be used are those relating to the assessment period. If your assessment period is split over 2 tax years you have some apportioning to do.

    There was a circular out at the time this reg was changed but I can’t think which one it was.

    *Edit* Peter beat me to it

    #10157
    bmassie1
    Participant

    Having looked at the interpretation on the current Ward & Zeb, para 15.35, it suggests that the figures ‘applicable to the assessment period’ are the Tax & N/I figures which applied at the date of claim or the date of re-consideration.

    Should we not use the current Tax & N/I figures as notional deductions if we are re-assessing income of a Self Employed person within this fiscal year?

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