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

Lena earns a gross salary of £12,000 in 2025/26 from Pearson Ltd. Using the Class 1 employee rates for 2025/26 (nil to £12,570, 8% from £12,571 to £50,270, 2% above), what is Lena's Class 1 employee NIC?

Lena's earnings of £12,000 fall below the £12,570 annual threshold at which employee Class 1 NIC starts to be charged. The nil rate applies to the whole amount, so her Class 1 employee NIC for 2025/26 is £0.

  1. A£960
  2. B£0Correct
  3. C£34
  4. D£720

Explanation

Lena's earnings of £12,000 are below the £12,570 threshold, so the nil rate applies to all of them. Her employee NIC is therefore £0. Charging 8% on the whole £12,000 gives £960, which wrongly ignores the nil band.

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