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ACCA Strategic Professional · Advanced Taxation (UK) · Income tax: income from self-employment

Which statement about national insurance for a self-employed individual is correct under the ATX-UK rates for Finance Act 2025?

Class 4 is charged at 6% on profits from £12,571 to £50,270 and 2% on profits above that, after a nil band to £12,570. The 8% rate belongs to employee Class 1, and Class 1A is an employer charge on benefits.

  1. AClass 4 contributions are charged at 6% on profits between £12,571 and £50,270 and 2% above that.Correct
  2. BClass 4 contributions are charged at 8% on profits between £12,571 and £50,270 and 2% above that.
  3. CClass 4 contributions are charged at 6% on all profits above £12,570.
  4. DClass 1A at 15% is payable by the sole trader on their own profits.

Explanation

The tables give Class 4 at nil up to £12,570, 6% to £50,270 and 2% above. 8% is the employee Class 1 main rate. Class 1A is an employer charge on benefits provided to employees, not on a sole trader's own profits.

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