Complete 2026 Guide
If you are self-employed or a sole trader, you are responsible for paying your own National Insurance contributions (NIC). This is a tax on your profits that helps you qualify for certain state benefits, including the State Pension, Maternity Allowance, and Bereavement Benefits.
This guide provides a comprehensive overview of National Insurance for self-employed individuals, explaining the different types of NIC, the current thresholds, and how to pay.
The Two Types of National Insurance for Self-Employed People
There are two main types of National Insurance contributions that apply to self-employed individuals:
1. Class 2 National Insurance
Class 2 NIC is a flat-rate contribution that you pay if your profits are above a certain threshold.
- Rate: The Class 2 rate for 2025-26 is £3.45 per week.
- Threshold: You pay Class 2 if your annual profits are £6,725 or more.
- Reform: From 2025-26, the government is reforming Class 2. It will be abolished as a separate contribution and instead be included within Class 4. However, the benefits entitlement is protected and will be built on top of the current Class 4 payment.
If your profits are below £6,725:
- You do not have to pay Class 2 NIC.
- However, you can choose to pay voluntary Class 2 contributions to protect your entitlement to the State Pension and other benefits. This is known as ‘paying Class 2 voluntarily’.
2. Class 4 National Insurance
Class 4 NIC is a percentage of your annual profits. It is calculated along with your Income Tax.
- Rate: The Class 4 rate for 2025-26 is 6% on profits between the Lower Profits Limit and the Upper Profits Limit. There is an additional 2% rate on profits above the Upper Profits Limit.
- Lower Profits Limit: £12,570 (profits between £6,725 and £12,570 are subject to Class 2 only)
- Upper Profits Limit: £50,270
This means you will pay Class 4 at 6% on profits between £12,570 and £50,270, and 2% on any profits over £50,270.
Summary of NIC Rates and Thresholds for 2025-26
| Type | Rate | When It Applies |
|---|---|---|
| Class 2 | £3.45 per week | Profits £6,725 or more (abolished and merged with Class 4 from 2025-26) |
| Class 4 | 6% | Profits between £12,570 and £50,270 |
| Class 4 | 2% | Profits above £50,270 |
Note: Thresholds and rates are for the 2025-26 tax year. They are subject to change in future tax years.
What Benefits Do National Insurance Contributions Fund?
Paying National Insurance helps you build your entitlement to certain state benefits. These include:
- State Pension: You usually need 35 qualifying years of NIC to get the full new State Pension. You need at least 10 qualifying years to get any State Pension.
- Maternity Allowance: If you are pregnant and not eligible for Statutory Maternity Pay, Class 2 contributions can help you qualify.
- Bereavement Benefits: Certain payments to surviving partners.
- Contributory Employment and Support Allowance (ESA): A benefit for those unable to work due to illness or disability.
How Are National Insurance Contributions Paid?
Your National Insurance contributions are calculated and paid alongside your Income Tax through the Self Assessment process.
- Your Self Assessment Tax Return: When you file your tax return, the system will automatically calculate your Class 2 and Class 4 NIC based on your profits. For a full overview, see our HMRC Self Assessment Guide.
- The Amount is Added to Your Tax Bill: The total NIC due is added to your Income Tax bill, which you must pay by the 31 January deadline.
- It is Paid as Part of Your Tax Payment: You don’t pay NIC separately; you make one payment to HMRC covering both your Income Tax and NIC.
For more information on payment methods, see our guide: HMRC Payment Methods.
Example Calculation
Let’s say you have a self-employed profit of £35,000 for the 2025-26 tax year.
- Class 2: £3.45 per week x 52 weeks = £179.40
- Class 4:
- 6% x (£35,000 – £12,570) = 6% x £22,430 = £1,345.80
- Total NIC: £179.40 + £1,345.80 = £1,525.20
This amount would be added to your Income Tax bill and paid by 31 January 2027.
Do You Have to Pay National Insurance?
If your annual self-employed profits are £6,725 or more, you are legally required to pay Class 2 and Class 4 National Insurance. This is an obligation for all self-employed individuals.
However, you do not have to pay if your profits are below the small profits threshold (£6,725). But as mentioned, you may still want to pay voluntarily to protect your benefit entitlements.
What If You Are Also an Employee (PAYE)?
If you have a job as well as being self-employed, you may already pay Class 1 NIC through your employment. This can affect your Class 2 and Class 4 liability.
- Class 1 NIC is paid on your employment income.
- Class 2 and Class 4 NIC are paid on your self-employed profits.
They are separate and do not cancel each other out, but the ’employed’ and ‘self-employed’ parts are treated separately when calculating your State Pension entitlement.
When Should You Consider Voluntary Contributions?
If your profits are below the £6,725 threshold, paying voluntary Class 2 contributions can be a smart investment. Each qualifying year of NIC adds to your State Pension entitlement. Currently, it takes 35 qualifying years to get the full new State Pension. If you have gaps in your record, you can fill them with voluntary contributions.
You can check your National Insurance record and see if you have gaps through your Personal Tax Account.
How We Can Help
Understanding and calculating your National Insurance contributions can be confusing, especially with the recent reforms. Our team of ACCA-qualified accountants can help you:
- Calculate your exact Class 2 and Class 4 liability.
- Determine if you should pay voluntary contributions.
- Ensure your Self Assessment is accurate.
- Advise on how your NIC fits into your overall tax planning.
Let us handle your Self Assessment and National Insurance calculations.
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