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NIM24610 - Class 4 NICs: computation of liability: losses

Paragraph 3 of Schedule 2 to the Social Security Contributions and Benefits Act (SSCBA) 1992

Paragraph 3(1) of Schedule 2 to SSCBA 1992 provides that a trading loss is to be relieved for Class 4 National Insurance contributions (NICs) purposes in the same manner as for Income Tax under sections 64, 72, 83 and 89 of the Income Tax Act (ITA) 2007.

Paragraph 3(2) provides that no relief is available for a loss arising under:

  • section 383 of ITA 2007 - relief for payment of interest
  • sections 88 and 94 of ITA 2007  - the carrying forward or backward of interest paid which was not allowed in arriving at the trading profit or loss

As claims for losses under Class 4 NICs are made in the same way as for Income Tax, the guidance in the Business Income Manual applies to Class 4 NICs as well as Income Tax. 

Guidance on loss claims can be found at BIM85005 onwards. Guidance on particular aspects can be found at:


Claims for loss relief


Profit sharing arrangements


Time limits for loss relief claims


Late claims for loss relief


Loss relief under ITA2007/S64 (Set off against general income)


Loss relief under ITA2007/S72 (Loss in early year of trading)


Loss relief under ITA2007/S89 (Relief for a terminal loss)


Loss relief under ITA2007/S83 (Carry forward against same trade)

An Income Tax loss can be set against income that is not liable for Class 4 NICs. For example, an income tax loss can be set off under ITA2007/S64 against employment income liable to Class 1 NICs. To the extent that the loss has been used against income which is not liable to Class 4 NICs, relief has not been given for Class 4 NICs purposes. That part of the loss is independent of the Income Tax loss and can be carried forward against Class 4 NICs profits of any relevant trade. As a result, the Income Tax trading losses carried forward may be different from the NICs losses carried forward. 

Relief for an employment income loss may occasionally be given for Income Tax in an assessment on trading profits. In this situation, there is no Class 4 NICs loss that can be set against the Class 4 NICs profits.