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

Which statement about Class 1 NIC on employment income is correct under the rates in the ATX-UK tax rates and allowances for the 2025/26 year?

Employee Class 1 NIC is 8% on earnings between £12,571 and £50,270 and 2% on earnings above £50,270, after a nil band to £12,570. Employer NIC differs: it has a £5,000 nil band and then 15% on all further earnings.

  1. AEmployer Class 1 NIC is 15% on all earnings from the first pound of pay
  2. BEmployee Class 1 NIC is 8% on earnings between £12,571 and £50,270 and 2% above £50,270Correct
  3. CEmployee Class 1 NIC is 2% on earnings between £12,571 and £50,270 and 8% above £50,270
  4. DEmployer Class 1 NIC is nil on earnings up to £12,570 and 15% above that

Explanation

Employee Class 1 is nil to £12,570, 8% from £12,571 to £50,270 and 2% above. Employer Class 1 is nil on the first £5,000 and 15% above, so the options stating a 15% charge from the first pound, or a £12,570 employer threshold, are wrong. The reversed 2%/8% option swaps the bands.

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