National Insurance for the Self-Employed: Class 2 vs Class 4 Explained (2026/27)
Self-employed NI works differently from employed NI. Here is what you actually pay.
If you are self-employed in the UK — whether as a sole trader, freelancer, or side hustle earner — you pay national insurance differently from employees. Instead of Class 1 NI deducted through PAYE, you are liable for Class 2 and Class 4 NI, both reported and paid through self-assessment.
Class 2 national insurance
Class 2 NI is a flat-rate contribution paid if your self-employed profits exceed the small profits threshold. In 2026/27:
- Rate: £3.45 per week
- Small profits threshold: £6,725 per year
If your profits are below £6,725, you do not have to pay Class 2 NI, but you can chooseto pay it voluntarily to protect your entitlement to the state pension and certain benefits. This is often worth doing if you are building a state pension record.
Class 2 NI is what grants self-employed people access to the contributory benefits system — including the state pension, maternity allowance, and bereavement benefits. Without sufficient qualifying years, you build no entitlement to these.
Class 4 national insurance
Class 4 NI is a percentage-based contribution levied on profits above a lower threshold. In 2026/27:
- 9% on profits between £12,570 and £50,270
- 2% on profits above £50,270
Class 4 NI is calculated on the same profit figure as income tax — your taxable self-employed profits after deducting allowable business expenses and any capital allowances. It does not provide any benefit entitlement; it is purely a tax.
A worked example: £35,000 profit
Suppose your self-employed profits for 2026/27 are £35,000:
- Class 2 NI: £3.45 × 52 = £179.40
- Class 4 NI on £22,430 (35,000 − 12,570): 9% = £2,018.70
- Total NI: £2,198.10
You would also pay income tax: 20% on profits above £12,570, so 20% × £22,430 = £4,486. Total tax and NI combined: approximately £6,684.
Use our self-employed tax calculator to run this calculation accurately for your own income and circumstances.
If you are both employed and self-employed
If you have a day job and also earn self-employed income, you already pay Class 1 NI on your employment income. You are also liable for Class 2 and Class 4 NI on your self-employed profits.
However, there is an annual maximum NI contribution limit. If your combined Class 1 and Class 4 contributions exceed the annual maximum, you can reclaim the overpayment from HMRC via self-assessment. This is automatically calculated when you file your return, but you should be aware of it if you are near the upper earnings limit across both sources of income.
State pension entitlement for the self-employed
To receive the full new state pension, you need 35 qualifying years of national insurance contributions or credits. For the self-employed, qualifying years are built through Class 2 NI payments (and voluntary Class 3 contributions if gaps exist).
You need a minimum of 10 qualifying years to receive any state pension. If you have gaps in your record — from years of low or no self-employed income — paying voluntary Class 2 or Class 3 NI can fill them. The cost is typically much less than the resulting increase in state pension over retirement.
Check your state pension forecast via the government's Check your State Pension service to see your current qualifying years and projected pension.
How to pay: self-assessment
Class 2 and Class 4 NI are both reported and paid through your annual self-assessment tax return. Class 2 is included automatically when you complete the self-employment section. There is no separate payment process.
The payment deadline is 31 January following the end of the tax year — so NI on 2025/26 income is due by 31 January 2027. Payments on account may be required if your total tax and NI bill exceeds £1,000.
What about sole traders earning under the personal allowance?
If your profits are below the personal allowance (£12,570 in 2026/27), you pay no income tax. You also pay no Class 4 NI (since it only applies above £12,570). However, if your profits exceed £6,725, you still owe Class 2 NI — the £179.40 flat-rate contribution.
If your profits are below £6,725, no NI is due, but voluntary Class 2 contributions may be worth considering to maintain your state pension record.