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

Priya is employed by Quill Ltd and is paid gross earnings of £30,000 for the 2025/26 tax year. She has no taxable benefits. Using the Class 1 employee rates in the tax tables, what is Priya's Class 1 employee NIC for the year?

Priya's Class 1 employee NIC is £1,394.40. No NIC is due on the first £12,570 of earnings, and 8% applies to the remaining £17,430 of her £30,000 salary. Charging 8% on the full salary would overstate the liability.

  1. A£1,394.40Correct
  2. B£1,725.60
  3. C£2,400.00
  4. D£1,200.00

Explanation

Class 1 employee NIC is nil on the first £12,570 and 8% on earnings from £12,571 to £50,270. The charge is (£30,000 - £12,570) = £17,430 x 8% = £1,394.40. The figure £2,400 wrongly applies 8% to all earnings, and £1,725.60 wrongly applies 8% to earnings above £8,430, which is the wrong threshold.

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