Pillar Guide · Updated June 2026

Class 2 & Class 4 National Insurance for the Self-Employed 2026/27

National Insurance for the self-employed has changed in confusing ways. Class 2 has been abolished as a mandatory charge, yet it still exists as a voluntary contribution, and you can still earn the state pension credits it used to buy without paying anything, provided your profits clear the small profits threshold. Meanwhile Class 4 carries the real cost at 6% and 2% on your profits. This guide explains exactly how both work in 2026/27, what protects your state pension, and how it is all collected through Self Assessment, with worked examples.

Last updated: 7 June 2026Last reviewed: 7 June 2026How we verify

Overview of the Two Classes

The self-employed deal with two classes of National Insurance. Class 4 is the one with the real cost: a percentage charge on your profits, currently 6% then 2%. Class 2 used to be a small flat weekly charge that built your state pension; it has now been abolished as a mandatory payment but survives as a voluntary option.

The key point is that the benefit entitlement comes from the Class 2 side, while the money comes from the Class 4 side. Understanding which one protects your state pension, and which one is simply an extra tax, is the heart of getting your self-employed NI right.

Class 2: Abolished but Voluntary

For most self-employed people, the old compulsory Class 2 charge is gone. You no longer pay the flat weekly amount as a matter of course. But Class 2 has not disappeared entirely: it remains available voluntarily at £3.65 a week for those who want to top up their National Insurance record.

Why would you pay voluntarily? Because if your profits are low, you might otherwise have a gap in your record. Voluntary Class 2 is by far the cheapest way to fill that gap, costing a fraction of voluntary Class 3 (£18.40 a week). It is the budget option for protecting a qualifying year.

The Small Profits Threshold

The small profits threshold is £7,105 for 2026/27, and it is the figure that quietly does the heavy lifting. If your annual profits are at or above £7,105, you are treated as having paid Class 2 even though you pay nothing. You get the state pension and benefit credits for free.

If your profits fall below £7,105, those automatic credits stop. That year could become a gap unless you pay voluntary Class 2 to plug it. So the threshold is the dividing line between getting credits free and needing to pay £3.65 a week to keep your record intact.

Class 4 Rates and Bands

Profit band	Class 4 rate
Up to £12,570 (lower profits limit)	0%
£12,570 to £50,270	6%
Above £50,270	2%

Class 4 sits on top of your income tax on the same profits. It is not a benefit-building contribution; it is, in effect, an additional tax on self-employed earnings. The bands line up with the personal allowance (£12,570) and the higher rate threshold (£50,270), which keeps the calculation tidy.

NI and the State Pension

The new state pension requires 35 qualifying years of contributions or credits for the full amount (and at least 10 to get anything). For the self-employed, those qualifying years come from the Class 2 element, either paid voluntarily or credited free above the small profits threshold. Class 4 does not add qualifying years. This is why a self-employed person with several low-profit years should check their National Insurance record on gov.uk and consider voluntary Class 2 to avoid quietly losing state pension.

How It Is Collected

Both Class 4 and any voluntary Class 2 are collected through Self Assessment, calculated automatically when you file. They are paid with your income tax on the same deadlines: 31 January after the tax year, plus payments on account on 31 January and 31 July if your bill is large enough. Note that Class 4 is included in payments on account but Class 2 is not, so voluntary Class 2 always lands with the January balancing payment. There are no separate monthly NI payments as employees have.

Employed and Self-Employed

If you have a job and a self-employed sideline, you pay Class 1 NI on your salary through PAYE and Class 4 on your profits. There is an overall annual maximum across all NI classes, so you should not overpay, and the Self Assessment calculation adjusts the Class 4 due to reflect Class 1 already paid. High earners with both sources should sanity-check the figures, because the interaction between Class 1 and Class 4 is one of the easier things to get wrong.

Worked Examples

Example 1 - mid profits. A sole trader makes £40,000 profit. Class 4 is 6% on (£40,000 minus £12,570) = 6% of £27,430 = £1,645.80. Profits are above £7,105, so Class 2 credits are free and no voluntary payment is needed. This sits on top of their income tax for the year.

Example 2 - higher profits. A trader makes £70,000. Class 4 is 6% on (£50,270 minus £12,570) = 6% of £37,700 = £2,262, plus 2% on (£70,000 minus £50,270) = 2% of £19,730 = £394.60, giving £2,656.60 of Class 4.

Example 3 - low profits. A part-time trader makes £5,000, below the £7,105 threshold. No Class 4 is due and no free credit is given, so they pay voluntary Class 2 at £3.65 a week (about £190 for the year) to keep the year qualifying. Check the totals with the National Insurance calculator.

Common Mistakes

Assuming Class 2 being abolished means low-profit years are automatically protected (they are not below £7,105).
Thinking Class 4 builds the state pension (it does not; only Class 2 does).
Forgetting voluntary Class 2 lands with the January balancing payment, not in payments on account.
Trying to deduct Class 2 or Class 4 as a business expense.
Overpaying NI when employed and self-employed by ignoring the annual maximum.

Official References

FAQs

What National Insurance do the self-employed pay in 2026/27?

Self-employed people pay Class 4 National Insurance on their profits, charged at 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. Class 2 National Insurance, which used to be a flat weekly charge, has been abolished as a mandatory contribution, but it survives in voluntary form at £3.65 a week for people who want to top up their National Insurance record. Both are dealt with through Self Assessment alongside your income tax.

Has Class 2 National Insurance been abolished?

Class 2 has been abolished as a compulsory charge, so most self-employed people no longer pay the old flat weekly amount. However, the contribution still exists in voluntary form at £3.65 a week, and crucially, if your profits are above the small profits threshold of £7,105 you are treated as having paid Class 2 even though you pay nothing. That means you still build entitlement to the state pension and certain benefits without any cash outlay. Below that threshold you can choose to pay voluntarily to protect your record.

What is the small profits threshold?

The small profits threshold is £7,105 for 2026/27. If your annual self-employed profits are at or above this figure, you automatically receive National Insurance credits as though you had paid Class 2, building your entitlement to the state pension and contribution-based benefits, without paying anything. If your profits are below £7,105, you do not get those credits automatically, but you can choose to pay voluntary Class 2 at £3.65 a week to keep your record complete, which is usually far cheaper than voluntary Class 3.

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How much is Class 4 National Insurance?

Class 4 is charged on your profits at 6% on the slice between the lower profits limit of £12,570 and the upper profits limit of £50,270, then 2% on profits above £50,270. So a sole trader with £40,000 of profit pays 6% on £27,430 (£40,000 minus £12,570), which is £1,645.80. Class 4 is not the same as the income tax on those profits; it is an additional charge collected through the same Self Assessment return and the same January and July payment deadlines.

Do I need to pay voluntary Class 2 if my profits are low?

Possibly. If your profits are below the small profits threshold of £7,105 you do not automatically get National Insurance credits, so a year of low profits could become a gap in your record that reduces your eventual state pension. Paying voluntary Class 2 at £3.65 a week (about £190 a year) fills that gap very cheaply, far cheaper than the voluntary Class 3 rate of £18.40 a week. Whether it is worth it depends on how many qualifying years you already have toward the 35 needed for a full state pension.

How is self-employed National Insurance collected?

Class 4 (and any voluntary Class 2) is collected through Self Assessment, calculated automatically when you file your tax return. It is paid alongside your income tax on the same deadlines: by 31 January after the tax year, with payments on account on 31 January and 31 July if your bill is large enough. Importantly, Class 4 is included in payments on account but Class 2 is not, so your January balancing payment is where voluntary Class 2 actually lands. You do not make separate monthly NI payments as an employee would.

Does self-employed NI count towards the state pension?

Yes, but it is the Class 2 element (or the credit you get above the small profits threshold) that builds your state pension and contribution-based benefit entitlement, not Class 4. Class 4 is essentially an extra tax on profits that does not itself add to your benefit record. This is why protecting your Class 2 position matters even though the cash amounts are small: a complete record of qualifying years is what secures the full new state pension after 35 years of contributions or credits.

What if I am both employed and self-employed?

If you have both a job and self-employed profits, you can pay Class 1 NI through PAYE on your salary and Class 4 on your profits in the same year. There is an annual maximum so you do not overpay across all classes combined, and HMRC adjusts the Class 4 due to take account of Class 1 already paid. In practice the Self Assessment calculation handles this, but high earners with both sources should check the figures, because the interaction between the classes can be easy to get wrong.

Do partners in a partnership pay Class 2 and Class 4?

Yes. Each partner is treated as self-employed on their share of the partnership profits, and pays Class 4 on that share at the usual 6% and 2% rates, with the same small profits threshold credit or voluntary Class 2 option for the Class 2 element. Each partner files their own Self Assessment return showing their profit share. The partnership itself does not pay National Insurance; the liability sits with the individual partners according to how the profits are divided between them.

Can I deduct National Insurance as a business expense?

No. Class 2 and Class 4 National Insurance, like income tax, are personal liabilities arising from your profits, not business expenses, so you cannot deduct them when working out your taxable profit. They are paid out of profit after it has been calculated. This catches some people out: your tax-and-NI set-aside has to come from money you have already counted as profit, which is why budgeting a realistic percentage of every payment for tax and NI from the start is so important.

How do I work out my total self-employed NI bill?

Start with your profit, subtract £12,570, and charge 6% on the amount up to £50,270 and 2% on anything above, to get your Class 4 figure. Then decide whether you need to add voluntary Class 2 (only if profits are below £7,105 and you want to protect your record). A self-employed tax or National Insurance calculator does this instantly and also adds your income tax, giving you the full Self Assessment bill so you can set aside the right amount through the year.

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About the author

Emma Clarke

UK Tax Writer

Emma Clarke has been writing about UK personal tax since 2018, with a particular focus on Self Assessment, PAYE coding and the practical mechanics of how HMRC actually applies the rules to ordinary salaries. Her work concentrates on translating the dense language of HMRC manuals and Finance Act schedules into worked examples that show, pound by pound, how income tax and National Insurance reduce a gross salary to the figure that lands in a UK bank account. Emma covers the full PAYE lifecycle: tax codes (1257L, BR, K codes, emergency codes), the Marriage Allowance, the High Income Child Benefit Charge, salary sacrifice arrangements and their effect on pensionable pay, the Apprenticeship Levy, and the differences between the rUK and Scottish income-tax regimes. She is particularly interested in the edge cases that catch PAYE employees out — the £100,000 personal-allowance taper, the 60% effective marginal rate it creates, and the interaction between student-loan plans and pension contributions. Every figure in Emma's articles is verified against the current HMRC rates pages and worked through a Self Assessment calculation by hand before publication. She writes to CalcHub's editorial standards: primary-source citations, plain English, no promotional language, and clear "this is general information, not financial advice" disclaimers where appropriate.

Personal-finance writer since 2018
UK tax specialism — PAYE, Self Assessment, National Insurance
Writes to CalcHub editorial standards (primary-source citation, annual review)

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Disclaimer: This guide reflects 2026/27 UK self-employed National Insurance rules. Rates, thresholds and the treatment of Class 2 change at fiscal events, and your own position depends on your full circumstances. Consult a qualified accountant for advice, and refer to gov.uk for current rates.