Have you overpaid National Insurance?

Have you overpaid National Insurance?

If you used to run a sole trade business in the last few years and either transferred it to a limited company or ceased trading, you could well have.

This year in particular, I have seen a worrying trend. HMRC’s systems are so disjointed that even though you may have ceased your sole trade business during a particular year, you will still be charged Class 2 National Insurance for the whole of that year.

Having spoken to numerous different departments at HMRC, the problem arises from the different systems in use by the income tax office and the NIC office. Putting your date of cessation within your tax return makes no difference to the amount of Class 2 NIC charged and, in every case I have seen, this leads to the taxpayer being charged more than they should be.

You can bet that if the tables were turned, and you owed HMRC any extra Income tax or National Insurance, they would come after you with more penalties and interest than you can shake a stick at.

My advice if you transferred your sole trade business to a limited company, or ceased trading, in the last few years would be to check if you have been charged the full amount of Class 2 NIC for that year.

If you have, it is always worth getting the overpaid National Insurance returned to you before you lose the right to appeal!