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

Lena is employed by Brightwell Ltd on an annual salary of £30,000 and receives no benefits. Using the rates in the Finance Act 2025 tax tables, what is Lena's Class 1 employee (primary) national insurance liability for the year?

Lena pays £1,394.40 of employee Class 1 NIC. The first £12,570 of earnings is at nil, and the remaining £17,430 of her £30,000 salary is charged at 8%. Applying 8% to the whole salary would ignore the nil band.

  1. A£1,394.40Correct
  2. B£2,400.00
  3. C£3,600.00
  4. D£1,954.40

Explanation

Employee Class 1 is nil up to £12,570 and 8% on earnings from £12,571 to £50,270. Taxable band: £30,000 - £12,570 = £17,430. £17,430 x 8% = £1,394.40. Charging 8% on the whole salary gives £2,400, which wrongly ignores the nil band.

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