ExpertEasy2 marksMultiple Choice
ACCA · Question 23 · Income tax and NIC liabilities
Section B - Case 2 (GreenRoots LLP)
Tom's allocated share of the partnership trading profit for 2023/24 is £50,000. He has no other income.
Which classes of National Insurance Contributions (NIC) is Tom liable to pay?
Section B - Case 2 (GreenRoots LLP)
Tom's allocated share of the partnership trading profit for 2023/24 is £50,000. He has no other income.
Which classes of National Insurance Contributions (NIC) is Tom liable to pay?
Answer options:
A.
Class 1 and Class 2
B.
Class 2 and Class 4
C.
Class 4 only
D.
Class 1A and Class 4
How to approach this question
Identify Tom's employment status (self-employed partner). Recall which NIC classes apply to the self-employed.
Full Answer
B.Class 2 and Class 4✓ Correct
Partners in an LLP are treated as self-employed for tax purposes. Therefore, they are liable for Class 2 NICs (a flat weekly rate, assuming profits exceed the Small Profits Threshold/Lower Profits Limit) and Class 4 NICs (a percentage of trading profits between the Lower and Upper Profits Limits, and a lower percentage above the UPL). They do not pay Class 1 (employees) or Class 1A (employers).
Common mistakes
Thinking partners are employees of the LLP and subject to Class 1 PAYE.
Practice the full ACCA TX — Taxation Practice Exam 2
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