Which tax is paid by both the employer and the employee?

• A. Income Tax
• B. National Insurance
• C. VAT
• D. Corporation Tax

Answer: (B)

National Insurance is paid by both the employer and the employee. It funds state benefits like the state pension and certain sickness or unemployment benefits. The employee contributes through payroll deductions on their earnings, while the employer also pays a separate amount based on the employee’s earnings as part of the payroll costs. This dual contribution setup is what makes National Insurance unique among the options.

Income Tax is charged on an individual’s income and is typically deducted from the employee’s wages, not paid by the employer as such. VAT is collected by businesses on most goods and services sold and passed to the government, not paid by the employee as a direct payroll deduction. Corporation Tax is charged on a company’s profits and paid by the company itself.