National Insurance for the Self-Employed Explained

Two Types of NI for the Self-Employed

When you are self-employed, you pay National Insurance through your Self Assessment tax return. There are two classes:

Class 2 National Insurance

• Rate: £3.45 per week (£179.40 per year) for 2025/26
• Who pays: Self-employed people with profits above the Small Profits Threshold (£6,725)
• What it provides: Contributes to your State Pension qualifying years and entitlement to certain benefits (Employment and Support Allowance, Maternity Allowance)

Class 4 National Insurance

• Rate: 6% on profits between £12,570 and £50,270; 2% on profits above £50,270
• Who pays: Self-employed people with profits above £12,570
• What it provides: Nothing directly — Class 4 does not count towards State Pension or benefit entitlement. It is essentially an additional tax on self-employment profits

How NI Is Calculated and Paid

Both classes are calculated on your Self Assessment tax return based on your annual self-employment profit. You pay them alongside your income tax, with the same deadlines:

• 31 January after the end of the tax year
• 31 July (second payment on account, if applicable)

Example for 2025/26

Self-employment profit: £40,000

• Class 2: £179.40
• Class 4: 6% × (£40,000 - £12,570) = £1,645.80

Total NI: £1,825.20

Voluntary Class 2 Contributions

If your profits are below the Small Profits Threshold (£6,725), you do not have to pay Class 2 NI. However, you can choose to pay voluntarily. This is highly recommended because:

• It costs only £179.40 per year
• It gives you a full qualifying year for State Pension
• Each qualifying year adds approximately £327 per year to your State Pension — for life

The return on investment is extraordinary.

NI and State Pension

Only Class 2 contributions count towards your State Pension. You need 35 qualifying years for the full new State Pension (£221.20 per week for 2025/26). Check your State Pension forecast on GOV.UK to see where you stand.

NI vs Employed People

Employed people pay Class 1 NI (8% on earnings between £12,570 and £50,270, 2% above). Their employers also pay 13.8% employer's NI on top. Self-employed NI rates are lower, but so are the benefits — self-employed people do not qualify for Jobseeker's Allowance or statutory redundancy pay.

Track your profits and NI liability with Accounted.

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Understand your NI obligations and protect your State Pension. Sign up for Accounted and let Penny calculate your NI alongside your income tax.