Hi,
I pay my Tax and Class 2 National Insurance Contributions in 2 big lump sums to HMRC. Now I try to tag this sum to HMRC on my current bank account and get this message:
Please Note: Class 2 National Insurance Contributions are non-tax deductible,
they should be removed from the accounts or tagged to proprietor drawings.
How can I split this sum/tag in TAX and Class 2 National Insurance Contributions so that the TAX is tax deductible and the Class 2 National Insurance Contributions are non-tax deductible? How can I do this?
Thank you
You don’t need to split anything - the whole self assessment payment should be tagged as drawings as none of personal income tax, class 2 or class 4 NI count as business expenses.
(The amount you as an individual owe is based in part on your business net profit but the payment is your personal liability and can’t be deducted from the next year’s profits as that would mean you underpaying the following year’s tax)
Thank you very much for your reply. I thought that but I was wondering about the notification which came up as I tried to tag this to the drawing account. Again, thank you very much.