Self Assessment and Class 4 National Insurance: How It's Calculated

Class 4 National Insurance is a profit-based contribution for the self-employed. Unlike Class 2 (a flat weekly amount), Class 4 is calculated as a percentage of your profits and can add significantly to your tax bill.

2026/27 Rates

| Profit range | Rate | |-------------|------| | Up to £12,570 | 0% | | £12,571 – £50,270 | 6% | | Above £50,270 | 2% |

How It Is Calculated

Class 4 NI is calculated on your taxable profit from self-employment — your income minus allowable expenses.

Example: If your self-employment profit is £40,000:

• First £12,570: £0
• £12,571 to £40,000 (£27,430): 6% = £1,645.80
• Total Class 4 NI: £1,645.80

Combined with Income Tax

Your total Self Assessment bill includes Income Tax, Class 2 NI, and Class 4 NI. For a sole trader with £40,000 profit:

• Income Tax: approximately £5,486
• Class 2 NI: £179.40
• Class 4 NI: £1,645.80
• Total: approximately £7,311

Reducing Class 4 NI

Since Class 4 NI is based on profit, anything that reduces your profit reduces your NI bill:

• Claiming all allowable expenses
• Capital allowances
• Pension contributions (reduce Income Tax but not Class 4 NI directly)

Note: pension contributions reduce Income Tax but do not reduce Class 4 NI. The Class 4 calculation is based on trading profit before pension relief.

Accounted shows your Class 4 NI liability in real time alongside your Income Tax estimate.

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