Test your understanding: answers
(1). Jocasta’s salary is not employment income but is merely part of her partnership profit share. Accordingly, she will only pay class 2 and class 4 National Insurance contributions. She will not have to pay class 1 National Insurance contributions.
(2). A company’s distributable profits are after the deduction of corporation tax. Accordingly, RFJ Ltd will have paid corporation tax at 20% on its profits. The first £5,000 of dividends received by Rakel will be taxed at 0% due to the dividend nil rate band. The remainder of the dividend income will be taxed at 32.5%.