Self-Employed: Class 2 and Class 4 national insurance contributions Explained

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If you are self-employed in the UK, you may have heard of Class 2 and Class 4 National Insurance contributions and wondered whether you actually have to pay them. National Insurance can be confusing because the rules for self-employed people are different from those for employees, and the rules around Class 2 National Insurance changed in April 2024. In this guide, we explain how Class 2 and Class 4 National Insurance work, who pays them, how much you may have to pay and how they are normally collected through Self Assessment.

What is National Insurance for the self-employed?

National Insurance is a system of contributions that helps fund certain state benefits and other public services, and if you work for yourself as a sole trader or in a partnership, your National Insurance position is generally based on the profits from your self-employed business rather than simply the amount of money you receive from customers.

Your taxable self-employed profit is broadly calculated by taking your business income and deducting allowable business expenses, so keeping accurate records and understanding what expenses you can claim is important. If you are unsure which costs you can deduct, our guide on what self-employed expenses you can claim explains some of the common expenses that may be available to sole traders.

For most self-employed people, the two National Insurance classes that are relevant are Class 2 and Class 4.

What are class 4 national insurance contributions?

Class 4 National Insurance contributions are calculated as a percentage of your self-employed profits once those profits exceed the relevant threshold.

Unlike Class 2, which is a flat weekly amount when voluntary contributions are made, Class 4 is linked directly to your profits, so the more profit you make above the relevant threshold, the more Class 4 National Insurance you may have to pay.

For the 2026/27 tax year, Class 4 National Insurance is charged at 6% on profits between £12,570 and £50,270, and at 2% on profits above £50,270. Profits below £12,570 are not subject to Class 4 National Insurance.

These figures apply to the 2026/27 tax year, so it is important to check the rates for the particular tax year you are calculating.

Who pays Class 4 National Insurance?

If you are self-employed and your taxable profits are above the Class 4 threshold, you will normally have to pay Class 4 National Insurance contributions.

The important point is that Class 4 is based on profits, not turnover. For example, if your business receives £40,000 during the tax year but you have £10,000 of allowable business expenses, your profit may be £30,000, and it is this profit figure that is relevant when calculating Class 4 National Insurance.

This is one reason why understanding your allowable expenses is important when working out how much tax and National Insurance you may owe.

Class 4 National Insurance is normally calculated as part of your Self Assessment tax return, rather than being paid separately each week or month.

What are Class 2 National Insurance contributions?

Class 2 National Insurance is different from Class 4 because it is not normally a percentage of your profits.

The rules changed from 6 April 2024. Self-employed people with profits at or above the Small Profits Threshold no longer have to actually pay Class 2 National Insurance, but their contributions are treated as having been paid for National Insurance record purposes.

For the 2026/27 tax year, the Small Profits Threshold is £7,105. If your self-employed profits are £7,105 or more, you do not normally pay Class 2 National Insurance, but the contributions are treated as paid.

If your profits are below £7,105, you do not have to pay Class 2, but you may be able to choose to pay voluntary Class 2 contributions.

Who pays Class 2 National Insurance?

Since April 2024, most self-employed people with profits at or above the Small Profits Threshold do not actually make a Class 2 payment because their contributions are treated as having been paid.

If your profits are below the Small Profits Threshold, you can choose to pay Class 2 voluntarily. For 2026/27, the voluntary Class 2 rate is £3.65 per week.

The reason someone with low profits might consider voluntary Class 2 contributions is that National Insurance contributions can help protect their National Insurance record and entitlement to certain contributory benefits, including the State Pension.

However, whether paying voluntary contributions is worthwhile depends on your individual circumstances and your existing National Insurance record, so you should check your record before deciding to make additional contributions.

Why did the Class 2 National Insurance rules change?

The requirement for most self-employed people to pay Class 2 National Insurance was removed from 6 April 2024 as part of changes announced by the government.

Previously, Class 2 was generally charged as a weekly flat-rate contribution for self-employed people whose profits reached the relevant threshold. From April 2024, this liability was removed, while people with profits above the Small Profits Threshold continued to receive the relevant National Insurance record treatment without having to make the Class 2 payment.

This means that older articles and online calculators can sometimes give you information that no longer applies to the current tax year, particularly if they were written before April 2024.

What is the difference between Class 2 and Class 4 National Insurance?

The simplest way to understand the difference is that Class 4 is based on your profits, while Class 2 is now mainly relevant as a National Insurance record mechanism for self-employed people with lower profits and as a voluntary contribution for people below the Small Profits Threshold.

For 2026/27, a self-employed person with profits of £30,000 would normally have Class 4 National Insurance to pay because their profits exceed £12,570, while they would not separately pay Class 2 because their profits are above £7,105 and their Class 2 contributions are treated as paid.

This is why it is important not to simply add a weekly Class 2 contribution to your Class 4 calculation when estimating your current Self Assessment bill.

How much Class 4 National Insurance will I pay?

The amount depends on your taxable self-employed profits.

For 2026/27, the main Class 4 rate is 6% on profits above £12,570 up to £50,270. A lower rate of 2% applies to profits above £50,270.

For example, if your taxable self-employed profit is £30,000, the amount subject to Class 4 National Insurance would be £17,430.

At 6%, that would produce Class 4 National Insurance of approximately £1,045.80.

This is only an example of the Class 4 calculation and does not represent the total tax you would pay because Income Tax and other amounts may also be included in your Self Assessment calculation.

If you want to understand the wider calculation, our guide on how self-employed people pay tax in the UK explains how Income Tax and National Insurance fit together.

Do I pay Class 2 and Class 4 National Insurance together?

You may have both Class 2 and Class 4 National Insurance shown as relevant to your Self Assessment, but this does not necessarily mean that you will make an actual payment for both classes.

For 2026/27, if your profits are at least £7,105, your Class 2 contributions are treated as paid, while Class 4 becomes payable once your profits exceed £12,570.

If your profits are below £7,105, you will not normally have to pay Class 4 either, and you may choose whether to pay voluntary Class 2 contributions.

Your exact position can depend on your circumstances, particularly if you have both employment and self-employed income or have other sources of National Insurance contributions.

How are Class 2 and Class 4 National Insurance paid?

For most self-employed people, Class 2 and Class 4 National Insurance are dealt with through the Self Assessment system.

When you complete your Self Assessment tax return, HMRC calculates the relevant National Insurance contributions based on the information you provide about your self-employed income and expenses.

This means that you do not normally need to make a separate monthly payment for Class 4 National Insurance. Instead, it forms part of the amount calculated through your Self Assessment tax return.

If you are trying to estimate how much money you should keep aside during the year, it is therefore important to consider both your expected Income Tax and National Insurance rather than looking at Income Tax alone.

Our guide on how much money you should put away for tax when self-employed explains how to plan for your Self Assessment bill throughout the year.

What happens if I am both employed and self-employed?

It is possible to be employed and self-employed at the same time, and in that situation your employer will normally deduct Class 1 National Insurance from your employment income while you may also have Class 4 National Insurance to pay on your self-employed profits.

The calculation can be more complicated because your employment income and self-employed profits can interact when determining the amount of National Insurance due. HMRC will calculate the amount due after you submit your Self Assessment tax return.

If you have both employment and self-employed income, it is therefore a good idea to make sure your Self Assessment return contains the correct employment and self-employment figures.

Does paying Class 4 National Insurance give me State Pension entitlement?

Class 4 National Insurance should not be treated in exactly the same way as Class 2 when considering your National Insurance record.

The important point for self-employed people is that profits at or above the relevant Small Profits Threshold can result in Class 2 contributions being treated as paid, even though no Class 2 payment is actually made. This helps protect the relevant National Insurance record.

If your profits are below the threshold, voluntary Class 2 contributions may be an option, but you should first check your National Insurance record and whether you actually need additional qualifying years.

Do I need to calculate National Insurance myself?

You do not normally need to calculate the final amount of Class 2 and Class 4 National Insurance manually because your Self Assessment calculation will determine the amount based on the information in your tax return.

However, understanding the calculation is still useful because it allows you to estimate how much you may need to pay and avoid being surprised when your Self Assessment bill arrives.

If you are self-employed, keeping accurate records of your income and allowable expenses throughout the year will make the final calculation much easier and can also help you put aside an appropriate amount for your tax bill.

National Insurance for the self-employed: key points

For most sole traders, the important points to remember are that Class 4 National Insurance is based on your taxable profits, while Class 2 National Insurance is no longer normally a compulsory payment for self-employed people.

For 2026/27, Class 4 is charged at 6% on profits between £12,570 and £50,270 and 2% on profits above £50,270. Class 2 contributions are treated as paid when profits reach £7,105, while people with profits below that level can choose to pay voluntary Class 2 contributions at £3.65 a week.

Understanding these rules can make it much easier to estimate your Self Assessment bill and plan your cash flow throughout the year, particularly if you are new to self-employment and are not used to setting aside money for Income Tax and National Insurance.

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