R03 Class 1 and class 1A NICs: free practice questions

1. Question 1 of 5

   Which class of National Insurance contribution is only ever paid voluntarily?

   Option A: Class 3Option B: Class 1AOption C: Class 4Option D: Class 1

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   The answer is A: Class 3

   Class 3 contributions are voluntary flat-rate payments that anyone can make to fill gaps in their record. Class 2 is now also only paid voluntarily, by the self-employed with low profits.

   Why the other options are wrong

   B

   Class 1A is a compulsory employer charge on benefits.

   C

   Class 4 is compulsory for the self-employed on profits above the lower limit.

   D

   Class 1 is compulsory for employees and employers on earnings.

2. Question 2 of 5

   What are the weekly primary threshold and upper earnings limit for 2026/27?

   Option A: £96 and £967Option B: £129 and £967Option C: £242 and £967Option D: £242 and £481

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   The answer is C: £242 and £967

   Employees pay NICs on earnings above the primary threshold (£242 a week; £12,570 a year) at 8% up to the UEL (£967 a week; £50,270 a year), and 2% above it.

   Why the other options are wrong

   A

   £96 is the secondary threshold for employers.

   B

   £129 is the lower earnings limit.

   D

   £481 is the freeport upper secondary threshold.

3. Question 3 of 5

   A qualifying freeport employee earns £700 a week. What are the employer's class 1 NICs each week?

   Option A: £90.60Option B: NilOption C: £17.52Option D: £32.85

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   The answer is D: £32.85

   For the first three years of a qualifying freeport employment, the employer pays 0% up to £481 a week, then 15%: (£700 − £481) × 15% = £32.85.

   Why the other options are wrong

   A

   Qualifying freeport employees attract 0% up to £481 a week.

   B

   The 0% rate only applies up to £481 a week.

   C

   The employer rate above the threshold is 15%, not 8%.

4. Question 4 of 5

   Which penalties can apply when an employer pays its annual class 1A NICs late?

   Option A: No penalty for the first late payment, then 1%Option B: A single 1% penalty whatever the delayOption C: Up to three 5% penalties, at 30 days, six months and twelve monthsOption D: A flat £100 penalty for each month the payment is late

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   The answer is C: Up to three 5% penalties, at 30 days, six months and twelve months

   Late class 1A payments can attract a 5% penalty if not paid within 30 days, another at six months and a third at twelve months, plus daily interest.

   Why the other options are wrong

   A

   That leniency relates to class 1 payments under PAYE.

   B

   There can be up to three 5% penalties.

   D

   Class 1A late payment penalties are percentage-based.

5. Question 5 of 5

   Which worker may be treated as an employee for NICs even if not for income tax?

   Option A: A landlord letting several flatsOption B: A nurse placed in temporary work by an agencyOption C: A plumber running his own firm with several staffOption D: A freelance consultant with many clients

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   The answer is B: A nurse placed in temporary work by an agency

   Regulations treat some workers as employees for NICs, including agency workers, domestic workers and office cleaners, many lecturers, ministers of religion and some film and TV workers.

   Why the other options are wrong

   A

   Letting is property income, not employment.

   C

   A genuine business owner is self-employed for both.

   D

   Freelancers with many clients are generally self-employed.

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