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ACCA Applied Skills · Taxation (UK) · Income from employment

Which one of the following statements about an individual treated as self-employed rather than employed is correct for the 2025/26 tax year?

A self-employed individual pays Class 4 NIC at 6% on profits between £12,571 and £50,270, and 2% on profits above that. Class 1 NIC applies only to employees, so the other statements describe employment or use incorrect rates.

  1. AThe individual pays Class 1 NIC at 8% on earnings between £12,571 and £50,270
  2. BThe payer must pay Class 1 employer NIC at 15% on amounts above £5,000 a year
  3. CThe individual pays Class 4 NIC at 6% on profits between £12,571 and £50,270Correct
  4. DThe individual pays Class 4 NIC at 8% on profits above £50,270

Explanation

A self-employed person pays Class 4 NIC at 6% on profits between £12,571 and £50,270 and 2% above that. Class 1 employee and employer NIC arise only if the individual is an employee, so the first two options are wrong. The 8% rate in the last option is the wrong rate and band.

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