Self-Employed Class 4 NI 2025/26: The 6% Rate Explained

Quick answer

If you are a sole trader, partner in a partnership, or otherwise self-employed for tax purposes in the UK, Class 4 National Insurance is charged on your trading profits at the following 2025/26 rates:

The thresholds match the personal allowance and higher-rate threshold for income tax, which is no coincidence — they have been aligned since 2017/18.

How Class 4 NI fits the bigger picture

Self-employed people in the UK potentially pay three NI classes:

Class 4 is the self-employed equivalent of the employee Class 1 contribution. Class 2 used to be a flat weekly charge that gave entitlement to State Pension and certain benefits — from April 2024 you get the entitlement automatically (provided profits exceed the £6,725 Small Profits Threshold), without having to pay the £3.45/week.

The journey from 9% to 6%

Class 4 was at 9% for years. Two cuts in quick succession brought it down:

• 6 January 2024: rate cut from 9% to 8% (announced in Autumn Statement 2023).
• 6 April 2024: further cut from 8% to 6% (announced in Spring Budget 2024).

The 6% rate has carried into 2025/26 unchanged. For comparison, employee Class 1 NI was also cut twice — from 12% to 10% in January 2024, then to 8% in April 2024 — meaning the self-employed are now in the unusual position of paying less NI than employees on the same earnings.

Why does this matter politically?

For decades the rationale for the lower self-employed NI rate was that the self-employed accrued fewer benefits (no Statutory Sick Pay, no Statutory Maternity Pay, no employer pension contributions, no auto-enrolment, no holiday entitlement). With the 6% rate the gap has widened — the self-employed now save 2p in NI on every pound between £12,570 and £50,270, on top of paying nothing equivalent to the 15% employer NI.

Whether the gap survives a future Budget is anyone's guess. Several think tanks (IFS, Resolution Foundation) have argued that the differential is hard to justify on labour-market grounds.

Worked example — Tom, sole-trader plumber, £40,000 profit

Tom's accounts for 2025/26 show a taxable profit (after allowable expenses) of £40,000.

Class 4 NI:

• Profit in the 6% slice: £40,000 − £12,570 = £27,430.
• £27,430 × 6% = £1,645.80.
• Profit above £50,270: £0.
• Total Class 4: £1,645.80.

Income tax (England, no other income):

• Personal allowance: £12,570.
• Taxable: £27,430.
• 20% × £27,430 = £5,486.

Total HMRC bill on £40,000 of profit: £7,131.80 — Tom keeps £32,868.

Compare an employee on £40,000 gross PAYE:

• Income tax: £5,486 (same).
• Employee NI Class 1 (8%): £2,194.40.
• Net: £32,319.60.

The self-employed Tom keeps £549 more than an employee earning the same amount — entirely due to the Class 4 vs Class 1 gap. He still has no SSP, SMP, holiday pay or employer pension match, so the saving needs to fund his own protection.

Worked example — Maya, freelance designer, £75,000 profit

Maya breaks through the higher-rate threshold.

Class 4 NI:

• 6% slice: £50,270 − £12,570 = £37,700 × 6% = £2,262.
• 2% slice: £75,000 − £50,270 = £24,730 × 2% = £494.60.
• Total Class 4: £2,756.60.

Income tax (England):

• 20% on £37,700 (£12,571–£50,270) = £7,540.
• 40% on £24,730 (£50,271–£75,000) = £9,892.
• Total income tax: £17,432.

Total HMRC: £20,189. Maya nets £54,811 from £75,000 of profit — a keep-rate of 73%.

She would also typically owe Payments on Account of half this bill in advance for 2026/27, so her January 2027 cheque to HMRC is the £20,189 balancing payment plus £10,094 first POA — almost £30,300 in one go. Cash-flow planning matters.

Class 4 NI on Self Assessment

You don't fill in a separate Class 4 NI form. HMRC calculates it automatically from your SA103 self-employment pages, using:

• Box 28 (or net profit if you use the short version).
• Less: any losses brought forward used in the year.
• Less: any losses from another trade set off against this profit.

It feeds into your SA302 tax calculation alongside income tax. Both are paid together by 31 January following the tax year (with a half-payment on account by 31 July for most people).

If you have employment income alongside self-employment, your Class 1 NI from PAYE is set off against your Class 4 liability via the "maximum amount" rules — preventing double-charging. The mechanics are explained in our National Insurance explained guide.

Class 4 NI and pensions

Pension contributions reduce profits for income tax but not directly for Class 4 NI, with one important wrinkle: contributions made via the net-pay arrangement (rare for the self-employed) don't reduce Class 4 either. The vast majority of self-employed pension contributions go into a SIPP via relief-at-source, in which case the relief comes via your tax return for income tax only — Class 4 NI is unaffected.

In short: a sole trader sacrificing into a SIPP gets income tax relief but pays Class 4 on the full profit. This is one efficiency disadvantage compared with employee salary sacrifice. For more on the trade-offs, see our SIPP vs Workplace Pension post.

Class 4 NI vs paying yourself via a limited company

Many freelancers ask whether to incorporate. The Class 4 / dividend comparison for 2025/26:

The break-even point at which a limited company saves money has shifted with the Class 4 cut. With Class 4 at 6% (not 9%), the saving from incorporation is smaller, and most accountants now put the break-even at around £40,000–£50,000 of profit — below that, the admin and accountancy cost of a Ltd company often outweighs the tax saving. See our deep-dive: Sole Trader vs Limited Company 2025/26.

Allowable expenses to legitimately reduce Class 4

Class 4 is charged on taxable profit, so anything that reduces taxable profit reduces Class 4 NI as well as income tax. Common legitimate categories:

• Business mileage at HMRC approved rates (45p / 25p per mile).
• Home office: simplified flat-rate or actual proportion of bills.
• Phone, broadband, professional subscriptions.
• Equipment via Annual Investment Allowance.
• Pension contributions — for income tax only (see above).
• Trading allowance £1,000 — if total turnover under £1,000, you may opt for this instead of expenses.

See our breakdown: Self Assessment allowable expenses.

Try the calculator

To see the exact Class 4 + Class 1 + income tax + student loan picture on your specific profit figure:

For NI mechanics in isolation:

Sources

• HMRC: Self-employed National Insurance rates — gov.uk
• HM Treasury: Spring Budget 2024 — Class 4 cut to 6%
• HMRC: Self Assessment helpsheet HS222
• Institute for Fiscal Studies: analysis of employee vs self-employed NI differential