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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
, see all updates

Pre-enforcement: coding out: class 2 NIC debts: debt accepted for coding

The P2 Annual Coding Notice will be issued to the taxpayer showing a separate entry for any debt to be coded out. This will be described as ‘Outstanding debt’ and there will be an explanation of the calculation as follows.

Class 2 NIC debt

You owe £value arrears of Class 2 National Insurance contributions. We have written to you previously asking for payment of this amount. We told you that if you did not pay what is due then we would collect it by adjusting your tax code. By reducing your tax free amount by £value we expect you to pay tax at (%) on an extra £value this year, which should collect the amount you owe (£value at -% is £value).

Class 2 NIC and Self Assessment underpayment

You owe £value arrears of Class 2 National Insurance contributions and £value self assessment tax totalling £value. We have written to you previously asking for payment of this amount. We told you that if you did not pay what is due then we would collect it by adjusting your tax code. By reducing your tax free amount by £value we expect you to pay tax at (fig)% on an extra £value this year, which should collect the amount you owe (£value at (fig)% is £value).

Class 2 NIC and tax credit overpayment

You owe £value arrears of Class 2 National Insurance contributions and £value overpaid tax credit totalling £value. We have written to you previously asking for payment of this amount. We told you that if you did not pay what is due then we would collect it by adjusting your tax code. By reducing your tax free amount by £value we expect you to pay tax at (fig)% on an extra £value this year, which should collect the amount you owe (£value at (fig)% is £value).

Class 2 NIC, Self Assessment underpayment and tax credit overpayment

You owe £Value arrears of Class 2 National Insurance contributions and £value self assessment tax and £value overpaid tax credit totalling £value. We have written to you previously asking for payment of this amount. We told you that if you did not pay what is due then we would collect it by adjusting your tax code. By reducing your tax free amount by £value we expect you to pay tax at (fig)% on an extra £value this year, which should collect the amount you owe (£value at (fig)% is £value).

By collecting this debt with your tax the National Insurance contributions will not be available to be used for benefit calculations until after the end of the tax year and your record has been finalised.

January 2014 will be the first year that a class 2 NIC debt will be included in the coding run and P2.