R03 Self-employed, voluntary and planning NICs: free practice questions

1. Question 1 of 5

   Edwin is self-employed with profits of £30,000 in 2026/27. What is his class 2 position?

   Option A: He must pay class 2 at £3.65 a weekOption B: He gets no class 2 credit because his profits are too highOption C: Class 2 is treated as paid without him paying anythingOption D: He must pay class 2 at 6% of profits

   Show answer

   The answer is C: Class 2 is treated as paid without him paying anything

   Self-employed people with profits of £7,105 (the small profits threshold) or more are treated as having paid class 2, so they keep access to contributory benefits without paying.

   Why the other options are wrong

   A

   Above the small profits threshold, class 2 is deemed paid.

   B

   High profits give a deemed credit, not a loss of one.

   D

   Class 2 is a flat rate, and here it's deemed paid.

2. Question 2 of 5

   Last year Ali made a trading loss of £4,000, which he set against his other income for income tax. This year his trading profit is £30,000. On what profit is class 4 charged this year?

   Option A: £26,000Option B: £17,430Option C: £30,000Option D: £34,000

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   The answer is A: £26,000

   For class 4, a trading loss relieved against non-trading income for income tax can still be carried forward against later trading profits: £30,000 − £4,000 = £26,000. Class 4 is then 6% of the amount above £12,570.

   Why the other options are wrong

   B

   That deducts the £12,570 limit and ignores the loss brought forward.

   C

   A loss used against other income can still be carried forward for class 4.

   D

   A loss reduces profits; it isn't added to them.

3. Question 3 of 5

   When is voluntary class 2 for 2026/27 due through self assessment?

   Option A: 31 January 2028, in one sumOption B: 5 April 2027Option C: As payments on account in 2027Option D: Weekly, by direct debit during the tax year

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   The answer is A: 31 January 2028, in one sum

   Voluntary class 2 is collected through self assessment, with the full amount due on the following 31 January (31 January 2028 for 2026/27). No payments on account are needed.

   Why the other options are wrong

   B

   It's due on the 31 January after the tax year.

   C

   Class 2 isn't included in payments on account.

   D

   Under self assessment it's paid as one sum.

4. Question 4 of 5

   Which statement about class 3 contributions is correct?

   Option A: They are always charged at the rate of the year they coverOption B: They can be paid even if the year already has enough class 1Option C: They can be paid up to six years late, at the rate for the year of paymentOption D: They can be paid in the year the person reaches SPA

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   The answer is C: They can be paid up to six years late, at the rate for the year of payment

   Class 3 fills gaps in years with too few contributions. It can be paid up to six years later, at the rate for the year of payment, but not for the year State Pension age is reached or later.

   Why the other options are wrong

   A

   Late payments use the rate for the year they're paid.

   B

   They're only for years with insufficient contributions.

   D

   They can't be paid for that year or later.

5. Question 5 of 5

   A business owner employs his wife at £10,000 a year. What is the NIC position?

   Option A: She pays no NICs but still builds State Pension entitlementOption B: Neither she nor the employer pays any NICs at allOption C: She pays employee NICs, but only on her pay in excess of £6,708Option D: She pays employee NICs but gets no State Pension credit

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   The answer is A: She pays no NICs but still builds State Pension entitlement

   Pay between the LEL (£6,708) and the primary threshold (£12,570) earns State Pension credit without employee NICs. Employer NICs are due on the part above £5,000, and the salary must be justified by the work done.

   Why the other options are wrong

   B

   Employer NICs are due on pay above £5,000.

   C

   Employees pay nothing below the primary threshold of £12,570.

   D

   Her pay is below the primary threshold, so she pays nothing.

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