National Insurance as a self-employed person works differently from employees. Here’s what you pay and what you get.
Self-Employed NI Overview
| Class | What It Is | Rate (2025/26) |
|---|
| Class 2 | Flat weekly contribution | £3.45/week |
| Class 4 | Percentage of profits | 9% / 2% |
Both are calculated and paid through Self Assessment.
Class 2 National Insurance
Who Pays Class 2
| Profit Level | Class 2 Required? |
|---|
| Below £6,725 (Small Profits Threshold) | Voluntary |
| £6,725 or above | Mandatory |
Class 2 Rates
| Period | Amount |
|---|
| Weekly | £3.45 |
| Annual | £179.40 |
Collected through Self Assessment, not weekly payments.
Why Class 2 Matters
| Benefit | Class 2 Counts? |
|---|
| State Pension | Yes |
| Maternity Allowance | Yes |
| Employment and Support Allowance | Yes |
| Bereavement Benefits | Yes |
| Jobseeker’s Allowance | No |
Each year of Class 2 contributions is a qualifying year for state pension.
Class 4 National Insurance
Class 4 Rates
| Profit Band | Rate |
|---|
| Up to £12,570 | 0% |
| £12,570 – £50,270 | 9% |
| Above £50,270 | 2% |
Class 4 Examples
| Annual Profit | Class 4 NI Due |
|---|
| £20,000 | £668 |
| £30,000 | £1,569 |
| £40,000 | £2,469 |
| £50,000 | £3,369 |
| £60,000 | £3,569 |
| £80,000 | £3,969 |
Calculation Example: £40,000 Profit
| Band | Calculation | NI |
|---|
| Up to £12,570 | No NI | £0 |
| £12,570-£40,000 | £27,430 × 9% | £2,469 |
| Total Class 4 | | £2,469 |
Total NI: Class 2 + Class 4
| Annual Profit | Class 2 | Class 4 | Total NI |
|---|
| £15,000 | £179 | £219 | £398 |
| £25,000 | £179 | £1,119 | £1,298 |
| £35,000 | £179 | £2,019 | £2,198 |
| £50,000 | £179 | £3,369 | £3,548 |
| £75,000 | £179 | £3,869 | £4,048 |
When NI is Collected
| Event | Timing |
|---|
| Self Assessment submitted | January (for previous tax year) |
| Payment on account | July and January |
| Balancing payment | January |
NI is included in your Self Assessment bill, not paid separately.
Voluntary Class 2 (Low Earners)
If your profits are below £6,725:
| Option | Effect |
|---|
| Pay voluntarily | Protects pension record |
| Don’t pay | Gap in NI record |
Cost: Only £179.40/year — often worth it to maintain state pension entitlement.
How to Pay Voluntary Class 2
- Complete Self Assessment return
- Tick box to pay voluntary Class 2
- Amount added to tax bill
Or contact HMRC to set up direct payment.
Class 3 NI (Filling Gaps)
| Class | Rate | Purpose |
|---|
| Class 3 | £17.45/week | Fill gaps in NI record |
If you have years with no NI contributions, you can pay Class 3 to fill gaps and boost your state pension.
| Comparison | Class 2 | Class 3 |
|---|
| Weekly cost | £3.45 | £17.45 |
| Annual cost | £179 | £907 |
| Pension credit | Yes | Yes |
If eligible, Class 2 is much cheaper than Class 3 for the same pension benefit.
Employed and Self-Employed
If you’re both employed and self-employed:
| Employment NI | Self-Employment NI |
|---|
| Class 1 (via PAYE) | Class 2 and Class 4 |
Maximum NI Limit
There’s an annual maximum NI contribution. If you pay significant Class 1 through employment, your Class 4 may be reduced.
| Situation | Effect |
|---|
| Full-time employed + self-employed | May pay less Class 4 |
| Part-time employed + self-employed | Likely full NI on both |
HMRC calculates this automatically through Self Assessment.
State Pension and NI
Qualifying Years Needed
| Birth Date | Years Needed for Full State Pension |
|---|
| After 1970 | 35 years |
| Before 1951 (men) / 1953 (women) | 30 years |
Your NI Record
Check your record at: gov.uk/check-national-insurance-record
| What You’ll See | Meaning |
|---|
| Full year | Contributions paid |
| Gap | No contributions |
| Credits | Automatic (e.g., benefits) |
Filling Gaps
| Method | When to Use |
|---|
| Voluntary Class 2 | If self-employed with low profits |
| Voluntary Class 3 | If not self-employed |
| Check deadlines | Usually can fill last 6 years |
NI and Benefits Entitlement
Benefits Class 2 Enables
| Benefit | Available? |
|---|
| State Pension | Yes |
| Maternity Allowance | Yes (self-employed mothers) |
| Contributory ESA | Yes |
| Bereavement benefits | Yes |
Benefits NOT Based on NI
| Benefit | Basis |
|---|
| Universal Credit | Means-tested |
| Housing Benefit | Means-tested |
| Child Benefit | Universal (with income test) |
| PIP | Disability assessment |
NI Deferment (Rare)
If you have very high employment earnings, you can apply to defer Class 4:
| Situation | Deferment Available? |
|---|
| Employment earnings above £50,270 | May be able to defer |
| Expect to pay maximum NI through employment | Apply to HMRC |
This prevents overpaying, but it’s usually sorted through Self Assessment anyway.
Recent Changes
2024 Changes
Class 4 NI was reduced from 9% to 8% for main rate, then back to 9% in 2025/26. Rates change periodically — check current figures.
Abolished Class 2?
Plans to abolish Class 2 have been discussed but not implemented. For now, it continues.
Calculating Your NI Bill
Step-by-Step
| Step | Action |
|---|
| 1 | Calculate your annual profit |
| 2 | Is it above £6,725? → Class 2 due |
| 3 | Is it above £12,570? → Class 4 due |
| 4 | Calculate Class 4: 9% on £12,570-£50,270 |
| 5 | Calculate Class 4: 2% on anything above £50,270 |
| 6 | Add Class 2 (£179.40) |
| 7 | Total = your NI bill |
Quick Calculator
Profit: £45,000
| Component | Calculation |
|---|
| Class 2 | £179.40 |
| Class 4 (£12,570-£45,000) | £32,430 × 9% = £2,919 |
| Class 4 above £50,270 | £0 |
| Total NI | £3,098 |
Reducing NI Liability
Legitimate Ways to Reduce NI
| Method | Effect on NI |
|---|
| Claim all allowable expenses | Reduces profit, reduces Class 4 |
| Pension contributions | Reduces taxable profit |
| Capital allowances | Reduces profit |
What Doesn’t Work
| Method | Why It Doesn’t Help |
|---|
| Taking drawings instead of profit | NI based on profit, not drawings |
| Splitting income with spouse | Must be genuine partnership |
| Paying into personal savings | Doesn’t reduce profit |
Summary
| Key Point | Details |
|---|
| Class 2 | £3.45/week, protects pension |
| Class 4 | 9% on profits £12,570-£50,270, 2% above |
| When paid | Through Self Assessment |
| Benefits | State pension, Maternity Allowance, ESA |
| Keep paying | Don’t create gaps in your record |
National Insurance is cheaper for self-employed than employees on the same income, but you don’t get employer contributions to pension — make sure you’re saving separately for retirement.