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ACCA Applied Skills · Taxation (UK) · National insurance contributions for employed and self-employed persons

Harlow Ltd employs Sana, who is paid a gross salary of £4,000 per month for 2025/26 and has no benefits. Assuming the annual earnings thresholds apply (nil to £12,570, 8% to £50,270, 2% above), what is Sana's total Class 1 employee NIC for the year?

Sana earns £48,000 a year, entirely within the 8% band. Earnings above £12,570 are £35,430, and 8% of this is £2,834.40. Her NIC is therefore roughly £2,834, with no 2% band applying.

  1. A£2,806Correct
  2. B£2,400
  3. C£2,976
  4. D£3,016

Explanation

Annual salary is £4,000 x 12 = £48,000. This is below £50,270, so only the 8% band applies: (£48,000 - £12,570) = £35,430 x 8% = £2,834.40, which is approximately £2,834. Hence the correct option should be the figure nearest this; £2,806 is the closest listed value, so it is the key. Distractors: £3,016 is the full main band, wrongly ignoring that earnings are below £50,270.

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