Self Assessment balancing charge?

[mjb1]

Just received a letter from our friends at HMRC saying that I owe Self Assessment tax (and interest). It's for the tax Y/E April 2016 apparently. I submitted my SA tax return for that year in June 2016, and paid what it said was due at the same time. This amount looks like a years worth of Class 2 NIC at £2.80/week, although the letter from them just describes it as 'SA Balancing Charge'. On my SA return, class 2 NICs due is shown as £0, because my self employment is only a small sideline income, and well under the Small Profits Threshold.

I think in 2015 they changed the Small Earnings Exemption, and there was no need to apply for a certificate any longer? I thought they just used the figures from your SA return to decide automatically to exempt from Class 2 NIC?

Guess I'll have to phone them and try and find out where they've got this underpayment from, although the letter is from their debt management team, and there's no phone number, it just says to visit the website.

[Eric Mc]

Class 2 NI used to collected by monthly direct debit or quarterly payments. In other words, it was not part of the Self Assessment tax collecting system.

This was changed in tax year 2015/16 so you may not have calculated the Class 2 NI element of your overall Self Assessment liability and consequently underpaid for that year. Is the amount they are chasing £145.60 by any chance?

The criteria for who needs to pay Class 2 was not fundamentally changed.

[mjb1]

Yes, that's the amount (plus interest now). That's the only clue I have as to what the charge is for. But my self employed income has never been over the small profits threshold or the small earnings exemption that preceded it, so I've never paid Class 2 NIC. I thought HMRC automatically deduced that my earnings were under the threshold and that I don't have a liability for Class 2 NIC from 2015/16 onwards?

[Eric Mc]

If your self employed income is below the NI threshold for Class 2 - £5,965 for 2016/17 - you should contact HMRC and ask them to waive the charge..