Social Security Contributions and Benefits Act 1992

Section 16(3).

SCHEDULE 2 E+W+S Levy of Class 4 contributions with income tax

Interpretation E+W+S

1 E+W+S In this Schedule—

(a) “the Act of 1988” means the M1 Income and Corporation Taxes Act1988;

[F1 (ab) “ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005;]

[F2 (ac) “ITA 2007” means the Income Tax Act 2007;]

F3 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) “year” means year of assessment within the meaning of [F4 the Income Tax Acts (see section 989 of ITA 2007)].

Textual Amendments

F1 Sch. 2 para. 1(ab) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 422(2) (with Sch. 2)

F2 Sch. 2 para. 1(ac) inserted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 290(2) (with Sch. 2)

F3 Sch. 2 para. 1(b) repealed (with effect in accordance with s. 579(1) of the amending Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 75(1), Sch. 4 (with s. 579, Sch. 3)

F4 Words in Sch. 2 para. 1(c) substituted (with effect for the tax year 2007-08 and subsequent tax years) by The Income Tax Act 2007 (Amendment) Order 2010 (S.I. 2010/588), arts. 1(2), 2(2)

Marginal Citations

M1 1988 c. 1.

Method of computing profits or gains E+W+S

2 E+W+S Subject to the following paragraphs, Class 4 contributions shall be payable in respect of the full amount of all [F5 profits—

(a) which are the profits of any relevant trade, profession or vocation which is not carried on wholly outside the United Kingdom, and

(b) which are chargeable to income tax under Chapter 2 of Part 2 of ITTOIA 2005.]

Textual Amendments

F5 Words in Sch. 2 para. 2 substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 422(3) (with Sch. 2)

Reliefs E+W+S

3 (1) For the purposes of computing the amount of profits F6 ... in respect of which Class 4 contributions are payable, relief shall be available under, and in the manner provided by, the following provisions of [F7 ITA 2007]— U.K.

(a) [F8 sections 64 and 72] (set-off of trade losses against general income), but only where loss arises from activities the profits F6 ... of which would be brought into computation for the purposes of Class 4 contributions;

F9 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) [F10 section 83] (carry-forward of loss against subsequent profits); and

(d) [F11 section 89] (carry-back of terminal losses).

(2) The following relief provisions F12 ... shall not apply, that is to say—

(a) Chapter I of Part VII [F13 of the Act of 1988 and Chapters 2 and 3 of Part 3 and sections 457, 458 and 459 of ITA 2007] (personal reliefs);

(b) [F14 section 383 of ITA 2007] (relief for payment of interest);

F15 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d) [F16 sections 88 and 94 of ITA 2007] (treatment of interest as a loss for purposes of carry-forward or carry-back);

F17 (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F18 ...

(f) sections 619 and 620 (premiums or other consideration under annuity contracts and trust schemes); [F19 and

(g) section 639 (personal pension contributions).]

F20 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Where in the year 1990-1991 or any subsequent year of assessment for which a person claims and is allowed relief by virtue of sub-paragraph (1) above there falls to be made in computing his [F21 net income] for income tax purposes a deduction in respect of any loss in any relevant trade, profession or vocation—

(a) the amount of the deduction shall, as far as may be, be treated for the purpose of the charge to Class 4 contributions as reducing the person’s profits F22 ... for that year of any relevant trade, profession or vocation, and

(b) any excess shall be treated for that purpose as reducing such profits F22 ... for subsequent years (being deducted as far as may be from those of the immediately following year, whether or not the person claims or is entitled to claim relief under this paragraph for that year, and, so far as it cannot be so deducted, then from those of the next year, and so on).

(5) Relief shall be allowed, in respect of—

F23 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) payments under [F24 section 383 of ITA 2007] (relief for payment of interest), being payments for which relief from income tax is or can be given,

[F25 (c) payments from which a sum representing income tax must be deducted under—

(i) section 900(2) of ITA 2007 (commercial payments made by individuals),

(ii) section 903(5) of that Act (patent royalties), or

(iii) section 906(5) of that Act (certain royalties etc where usual place of abode of owner is abroad),

(d) so much of any payment from which a sum representing income tax must be deducted under section 910(2) of ITA 2007 (proceeds of a sale of patent rights: payments to non-UK residents) as is equal to the amount referred to in that provision as “the chargeable amount”, or

(e) a payment from which a sum representing income tax must be deducted as a result of a direction under section 944(2) of ITA 2007 (tax avoidance: certain payments to non-UK residents)]

[F26 so far as the payment is incurred] wholly or exclusively for the purposes of any relevant trade, profession or vocation, by way of deduction from or set-off against profits F22 ... chargeable to Class 4 contributions for the year in which the payments are made; and, in the case of any insufficiency of the profits F22 ... of that year, the payments shall be carried forward and deducted from or set off against the profits F22 ... of any subsequent year (being deducted or set off as far as may be from or against the profits F22 ... of the immediately following year, whether or not relief can be claimed under this paragraph for that year, and so far as it cannot be so deducted, from or against those of the next year, and so on).

Textual Amendments

F6 Words in Sch. 2 para. 3(1) repealed (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 422(4), Sch. 3 (with Sch. 2)

F7 Words in Sch. 2 para. 3(1) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 290(3)(a)(i) (with Sch. 2)

F8 Words in Sch. 2 para. 3(1)(a) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 290(3)(a)(ii) (with Sch. 2)

F9 Sch. 2 para. 3(1)(b) repealed (8.9.1998) by Social Security Act 1998 (c. 14), ss. 59(3), 87(2), Sch. 8; S.I. 1998/2209, art. 2(a), Sch. Pt. 1

F10 Words in Sch. 2 para. 3(1)(c) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 290(3)(a)(iii) (with Sch. 2)

F11 Words in Sch. 2 para. 3(1)(d) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 290(3)(a)(iv) (with Sch. 2)

F12 Words in Sch. 2 para. 3(2) repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 290(3)(b)(i), Sch. 3 Pt. 1 (with Sch. 2)

F13 Words in Sch. 2 para. 3(2)(a) inserted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 290(3)(b)(ii) (with Sch. 2)

F14 Words in Sch. 2 para. 3(2)(b) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 290(3)(b)(iii) (with Sch. 2)

F15 Sch. 2 para. 3(2)(c) repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 290(3)(b)(iv), Sch. 3 Pt. 1 (with Sch. 2)

F16 Words in Sch. 2 para. 3(2)(d) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 290(3)(b)(v) (with Sch. 2)

F17 Sch. 2 para. 3(2)(e) repealed (with effect in accordance with s. 147(3) of the amending Act) by Finance Act 1996 (c. 8), s. 147(2)(a), Sch. 41 Pt. 5(15) Note

F18 Word in Sch. 2 para. 3(2) omitted (retrospective to 1.7.1992) by Social Security (Contributions) Act 1994 (c. 1), s. 3(1)(a)(2)

F19 Sch. 2 para. 3(2)(g) and preceding word inserted (retrospective to 1.7.1992) by Social Security (Contributions) Act 1994 (c. 1), s. 3(1)(b)(2)

F20 Sch. 2 para. 3(3) omitted (with effect in accordance with s. 17(3) of the amending Act) by virtue of National Insurance Contributions Act 2014 (c. 7), s. 17(1)(a) (with s. 17(3))

F21 Words in Sch. 2 para. 3(4) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 290(3)(c) (with Sch. 2)

F22 Words in Sch. 2 para. 3(4)(5) repealed (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 422(4), Sch. 3 (with Sch. 2)

F23 Sch. 2 para. 3(5)(a) repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 290(3)(d)(i), Sch. 3 Pt. 1 (with Sch. 2)

F24 Words in Sch. 2 para. 3(5)(b) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 290(3)(d)(ii) (with Sch. 2)

F25 Sch. 2 para. 3(5)(c)-(e) inserted (with effect for the tax year 2007-08 and subsequent tax years) by The Income Tax Act 2007 (Amendment) Order 2010 (S.I. 2010/588), arts. 1(2), 2(3)(a)

F26 Words in Sch. 2 para. 3(5) substituted (with effect for the tax year 2007-08 and subsequent tax years) by The Income Tax Act 2007 (Amendment) Order 2010 (S.I. 2010/588), arts. 1(2), 2(3)(b)

Modifications etc. (not altering text)

C1 Sch. 2 para. 3(1) modified (21.7.2009) by Finance Act 2009 (c. 10), Sch. 6 para. 2(6)

C2 Sch. 2 para. 3(1) modified (10.6.2021) by Finance Act 2021 (c. 26), Sch. 2 para. 3(5)

Partnerships E+W+S

4 (1) Where a trade or profession is carried on by two or more persons jointly, the liability of any one of them in respect of Class 4 contributions shall arise in respect of his share of the profits F27 ... of that trade or profession (so far as immediately derived by him from carrying it on); and for this purpose his share shall be aggregated with his share of the profits F27 ... of any other trade, profession or vocation (so far as immediately derived by him from carrying it on or exercising it). U.K.

(2) Where sub-paragraph (1) above applies, the Class 4 contributions for which a person is liable in respect of the profits F27 ... of the trade or profession carried on jointly (aggregated, where appropriate, as mentioned in that sub-paragraph) [F28 shall be charged on him separately].

Textual Amendments

F27 Words in Sch. 2 para. 4 repealed (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 422(4), Sch. 3 (with Sch. 2)

F28 Words in Sch. 2 para. 4(2) substituted (8.9.1998) by Social Security Act 1998 (c. 14), ss. 59(4), 87(2); S.I. 1998/2209, art. 2(a), Sch. Pt. 1

Trustees, etc. E+W+S

5 E+W+S In any circumstances in which apart from this paragraph a person would—

F29 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) by virtue of [F30 section 8 of ITTOIA 2005] be assessed and charged to [F31 Class 4] contributions in respect of profits F32 ... received or receivable by him in the capacity of trustee,

such contributions shall not be payable either by him or by any other person.

Textual Amendments

F29 Sch. 2 para. 5(a) and word omitted (with effect for the tax year 2012-13 and subsequent tax years) by virtue of Finance Act 2012 (c. 14), s. 222(4)(c)(i) (with s. 222(5))

F30 Words in Sch. 2 para. 5(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 422(5)(b)(i) (with Sch. 2)

F31 Words in Sch. 2 para. 5(b) substituted (with effect for the tax year 2012-13 and subsequent tax years) by virtue of Finance Act 2012 (c. 14), s. 222(4)(c)(ii) (with s. 222(5))

F32 Words in Sch. 2 para. 5(b) repealed (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 422(5)(b)(ii), Sch. 3 (with Sch. 2)

Other provisions E+W+S

6 (1) [F33 Section 101 of the Finance Act 2009 (late payment interest on sums due to HMRC)] shall apply in relation to any amount due in respect of Class 4 contributions [F34 as it applies] in relation to income tax; and [F35 section 102 of the Finance Act 2009 (repayment interest on sums to be paid by HMRC)] shall, with the necessary modifications, apply in relation to Class 4 contributions as it applies in relation to income tax. U.K.

F36 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F33 Words in Sch. 2 para. 6(1) substituted (31.10.2011) by The Finance Act 2009, Sections 101 to 103 (Income Tax Self Assessment) (Appointed Days and Transitional and Consequential Provisions) Order 2011 (S.I. 2011/701), art. 9(a)

F34 Words in Sch. 2 para. 6(1) substituted (8.9.1998) by Social Security Act 1998 (c. 14), ss. 59(5)(b), 87(2); S.I. 1998/2209, art. 2(a), Sch. Pt. 1 (with art. 3)

F35 Words in Sch. 2 para. 6(1) substituted (31.10.2011) by The Finance Act 2009, Sections 101 to 103 (Income Tax Self Assessment) (Appointed Days and Transitional and Consequential Provisions) Order 2011 (S.I. 2011/701), art. 9(b)

F36 Sch. 2 para. 6(2) repealed (1.4.1999) by Social Security Contributions (Transfer of Functions, etc.) Act 1999 (c. 2), ss. 3(6), 28(3), Sch. 10 Pt. 1; S.I. 1999/527, art. 2(b), Sch. 2 (with arts. 3-6)

7 E+W+S Where an assessment has become final and conclusive for the purposes of income tax for any year, that assessment shall also be final and conclusive for the purposes of computing liability for Class 4 contributions; and no allowance or adjustment of liability, on the ground of diminution of income or loss, shall be taken into account in computing profits F37 ... chargeable to Class 4 contributions unless that allowance or adjustment has previously been made on an application under the special provisions of the Income Tax Acts relating to it, or falls to be allowed under paragraph 3(5) of this Schedule.

Textual Amendments

F37 Words in Sch. 2 para. 7 repealed (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 422(6), Sch. 3 (with Sch. 2)

8 U.K. The provisions of Part V of the M2 Taxes Management Act 1970 (appeals, etc.) shall apply with the necessary modifications in relation to Class 4 contributions as they apply in relation to income tax; [F38 but nothing in this Schedule affects the extent to which the Income Tax Acts apply with respect to any decision falling to be made—]

(a) under subsection (1) of section 17 above or subsection (1) of section 17 of the Northern Ireland Contributions and Benefits Act as to whether by regulations under that subsection a person is excepted from liability for Class 4 contributions, or his liability is deferred; or

(b) under regulations made by virtue of section 17(3) or (4) or 18 above or section 17(3) or (4) or 18 of the Northern Ireland Contributions and Benefits Act.

Textual Amendments

F38 Words in Sch. 2 para. 8 substituted (4.3.1999 for specified purposes, 1.4.1999 in so far as not already in force) by Social Security Contributions (Transfer of Functions, etc.) Act 1999 (c. 2), s. 28(3), Sch. 7 para. 11; S.I. 1999/527, art. 2(a)(b), Schs. 1, 2 (with arts. 3-6)

Marginal Citations

M2 1970 c. 9.

F39 ... E+W+S

Textual Amendments

F39 Sch. 2 para. 9 and heading omitted (13.3.2014) by virtue of National Insurance Contributions Act 2014 (c. 7), s. 17(1)(b)

F39 9 E+W+S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .