A sole trader has taxable trading profits of £60,000 in 2026/27. Class 4 NIC is 6% on profits between £12,570 and £50,270 and 2% on profits above £50,270. Class 2 is treated as paid. What is the Class 4 NIC?
Answer and explanation
Correct answer: A. £2,456.60
- Step 1: Main band: (£50,270 - £12,570) = £37,700 × 6% = £2,262.
- Step 2: Upper band: (£60,000 - £50,270) = £9,730 × 2% = £194.60.
- Step 3: Total = £2,262 + £194.60 = £2,456.60.
Answer
£2,456.60.
Why not the others: £2,262.00 leaves out the 2% on profits above £50,270. £3,000.00 charges 5% on the full £60,000. £2,845.80 charges 6% on all profits above £12,570 and ignores the lower 2% rate.
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