National Insurance contributions

Attach the right class to the right person before touching any numbers, because that's the first thing NIC questions test: employees pay primary Class 1 on earnings; their employer pays secondary Class 1 on the same earnings; the self-employed pay Class 4 on profits; Class 2 survives only as a voluntary contribution for low profits, and Class 3 is the general voluntary top-up. Then learn the two SHAPES, because the exam builds its distractors out of swapping them. Employee Class 1 is two-tier: 8% between the primary threshold and the upper earnings limit, then DOWN to 2% above it — a rate that falls as income rises, which is exactly why candidates misremember it as stopping, or as never changing. Employer Class 1 is flat: 15% on everything above the £5,000 secondary threshold, no upper limit, no drop — and note how much LOWER that threshold is than the employee's £12,570. Class 4 copies the employee shape onto profits: 6% between the lower and upper profits limits, 2% above. Finally the Class 2 rule as it now stands: nothing is compulsorily due — profits at or above the £6,845 small profits threshold have Class 2 treated as paid at no cost, and below it paying voluntarily protects the state pension record. The exam still tests the old compulsory regime as a distractor; don't take the bait.