The British are often said to be obsessed with the value of their homes. Last week we examined two ways in which the government is seeking to extract the maximum amount of tax on that value on the disposal of UK properties. We also explained why it may benefit your clients to pay their class 2 NIC in December rather than in January.
What follows is just an extract from last week’s tax tips sent out to all subscribers on Thursday morning. Please also note the caveats in the box on the right.
Pay class 2 NIC early
Paying Class 2 NIC allows the individual to qualify for certain contribution-based state benefits including; state retirement pension, maternity allowance, employment support allowance (ESA) and job seekers allowance (JSA). Note there are non-contribution versions of JSA and ESA.
To be eligible to receive the benefit the taxpayer must have paid sufficient class 2 NIC for a specified period, which differs for each benefit. For ESA and JSA the claimant must have paid at least 50 weeks of NIC for both of last two tax years which ended before the beginning of the benefit year. The DWP benefit year starts on the first Sunday in January, not on 6 April, as you might expect.
If the taxpayer pays all his class 2 NIC for the 2015/16 in January 2017 (due date is 31 January 2017), he won’t have paid those contributions before the start of the benefit year which starts on 1 January 2017. This means he will have paid insufficient class 2 NIC for the tax year 2015/16, and won’t qualify for the contribution based ESA or JSA for in 2017. The claimant may have to apply for income-based JSA instead.