Self-Employed Profit Below £7,105: State Pension Credits Explained 2026/27
What happens to your State Pension record if self-employed profits fall below the £7,105 small profits threshold in 2026/27, now Class 2 National Insurance is abolished for most.
The threshold that decides whether a year "counts"
Since Class 2 National Insurance was abolished as a compulsory payment for most self-employed people, the small profits threshold of £7,105 has become the key number determining whether a self-employed year automatically counts toward the 35 qualifying years needed for a full new State Pension. Profits at or above £7,105 mean the year is treated as if Class 2 has been paid, protecting the State Pension record without any actual payment needed.
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Someone whose self-employed profit falls below £7,105 — perhaps a part-time trader, someone in their first year of business, or a period of reduced work — does not get this automatic credit. Unlike an employee earning above the Lower Earnings Limit, whose qualifying year is protected through employer PAYE reporting, a low-profit self-employed year can silently fail to count toward the State Pension unless action is taken.
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The good news is that self-employed people below the small profits threshold are generally still eligible to pay voluntary Class 2 contributions at the low rate of £3.65 a week (£189.80 a year) to protect the qualifying year, rather than being forced onto the far more expensive voluntary Class 3 rate of £18.40 a week (£956.80 a year), which applies to people with no self-employment activity at all.
Bottom line
Falling below the £7,105 small profits threshold in any tax year means a self-employed person's State Pension qualifying year is not automatically protected, unlike years with higher profit. Paying voluntary Class 2 at £3.65 a week is a low-cost way to fill that gap, and is almost always the right choice over the much more expensive Class 3 rate for anyone who was genuinely self-employed that year.
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Frequently asked questions
What is the small profits threshold for 2026/27?
£7,105. Self-employed profits at or above this level are treated as if Class 2 National Insurance has been paid, protecting the qualifying year for State Pension and other contributory benefits, even though Class 2 itself has been abolished as a payable charge for most self-employed people.
What happens if my self-employed profit is below £7,105?
You do not automatically get a qualifying year for State Pension credited from self-employment, since profits below the small profits threshold do not trigger the automatic National Insurance credit that higher-profit self-employed people receive.
Can I still get a qualifying year if my profits are below £7,105?
Yes — you can choose to pay voluntary Class 2 National Insurance contributions at a low weekly rate to protect that year's State Pension record, even though you are not required to pay Class 2 automatically at this profit level.
How much does voluntary Class 2 cost compared with Class 3?
Voluntary Class 2 contributions, at £3.65 a week in 2026/27, are dramatically cheaper than voluntary Class 3 contributions at £18.40 a week, making Class 2 far better value for eligible self-employed people wanting to fill a gap year.
Who is eligible to pay voluntary Class 2 rather than Class 3?
Self-employed people whose profits fall below the small profits threshold, but who are still genuinely trading, are generally eligible for the cheaper voluntary Class 2 rate rather than being pushed to the much higher Class 3 rate that applies to non-workers filling gap years.
Does this only affect State Pension, or other benefits too?
A qualifying year from National Insurance contributions or credits also supports entitlement to contributory benefits such as Employment and Support Allowance and Maternity Allowance, not just the State Pension, so low-profit years can affect more than retirement income.
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