ExpertEasy2 marksMultiple Choice
ACCA · Question 05 · Income Tax and NIC Liabilities
Section A: Objective Test
Which of the following statements regarding National Insurance Contributions (NICs) is correct for the 2023/24 tax year?
Section A: Objective Test
Which of the following statements regarding National Insurance Contributions (NICs) is correct for the 2023/24 tax year?
Answer options:
A.
Class 1A NICs are payable by the employee on most taxable benefits in kind.
B.
Class 1A NICs are payable by the employer on most taxable benefits in kind provided to employees.
C.
Class 4 NICs are payable by employers on the trading profits of their self-employed contractors.
D.
Class 1 primary NICs are calculated on an employee's gross salary after deducting contributions to an occupational pension scheme.
How to approach this question
Review the different classes of NICs (Class 1, 1A, 2, 4) and identify who bears the liability for each.
Full Answer
B.Class 1A NICs are payable by the employer on most taxable benefits in kind provided to employees.✓ Correct
Class 1A NICs are an employer-only liability, payable at a rate of 13.8% (for 2023/24) on the value of most taxable benefits in kind provided to employees. Employees do not pay NICs on benefits in kind. Class 4 NICs are paid by self-employed individuals on their own trading profits. Class 1 primary NICs are calculated on gross earnings before any deduction for occupational pension contributions.
Common mistakes
Assuming employees pay NICs on their benefits in kind.
Practice the full ACCA TX — Taxation Practice Exam 1
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