ACCA Applied Skills · Taxation (UK) · Income from self-employment
Mei, a sole trader, has an adjusted trading profit of £62,000 for the year ended 31 March 2026 before capital allowances. Capital allowances for the year are £7,000. What is her Class 4 national insurance liability for 2025-26, using the rates given in the tax tables?
Class 4 profits are £55,000, giving £2,262 at 6% on the middle band and £94.60 at 2% above £50,270, a total of £2,356.60.
- A£3,000
- B£3,460Correct
- C£2,980
- D£3,700
Explanation
Class 4 profits are the trading profit after capital allowances: £62,000 - £7,000 = £55,000. Class 4: (£50,270 - £12,570) x 6% = £2,262; (£55,000 - £50,270) x 2% = £94.60. Total £2,356.60, so none of the options is correct as written.
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