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

Which statement about Class 4 NIC for a sole trader is correct under the ATX-UK tax tables for 2025/26?

Class 4 NIC is charged on a sole trader's profits at nil up to £12,570, 6% from £12,571 to £50,270 and 2% above that. The 8% and 15% rates and the employment allowance belong to Class 1 employee and employer contributions.

  1. AClass 4 is calculated on tax-adjusted trading profits, with nil on the first £12,570, 6% up to £50,270 and 2% aboveCorrect
  2. BClass 4 is charged at 8% on profits between £12,571 and £50,270
  3. CClass 4 is charged at 15% on all profits above £5,000
  4. DClass 4 is reduced by the £10,500 employment allowance

Explanation

The tables set Class 4 at nil to £12,570, 6% to £50,270 and 2% above. The 8% rate is the employee Class 1 rate. The 15% rate and £5,000 threshold relate to employer Class 1. The employment allowance reduces employer Class 1 only.

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