Skip to content

ACCA Strategic Professional · Advanced Taxation (UK) · National insurance contributions for employed and self-employed persons

Brightwater Ltd is a trading company with three employees, all unconnected to the directors. Its only employer's Class 1 NIC liability for the tax year before any relief is £14,000. Assuming it is eligible, how much employment allowance can Brightwater Ltd claim, and what is its net employer's Class 1 NIC payable?

Brightwater Ltd can claim the full £10,500 employment allowance against its £14,000 employer's Class 1 NIC, leaving £3,500 payable. The allowance is capped at £10,500 per year, so it cannot wipe out a liability larger than that amount.

  1. AAllowance £10,500; net NIC payable £3,500Correct
  2. BAllowance £14,000; net NIC payable £nil
  3. CAllowance £10,500; net NIC payable £14,000
  4. DAllowance £5,000; net NIC payable £9,000

Explanation

The employment allowance is £10,500 per year and is set against employer's Class 1 NIC. The liability is £14,000, so the allowance is fully used: £14,000 - £10,500 = £3,500 payable. Claiming £14,000 is wrong because the allowance is capped at £10,500.

Did you get it right without looking?

One question tells you little. A timed set on National insurance contributions for employed and self-employed persons shows your real accuracy, how long you take and where you lose marks.

Practise National insurance contributions for employed and self-employed personsFree diagnostic mock

More National insurance contributions for employed and self-employed persons questions