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Class 2 was not abolished, and the difference matters
You will read everywhere that Class 2 National Insurance was abolished. That is not quite right, and the imprecision costs people their state pension record.
What was removed, from 6 April 2024, was the liability. Class 2 still exists. If your profits are at or above the small profits threshold of £7,105, you are treated as having paid Class 2 and there is nothing to pay. You get the qualifying year for your state pension for free.
Below £7,105 is where it matters. You are not treated as having paid. If you want that year to count towards your state pension, you have to pay Class 2 voluntarily at £3.65 a week. Nobody sends you a reminder.
Why the low profit year is the trap
You need 35 qualifying years for the full new state pension and at least 10 to get anything at all. If you were ever contracted out of the additional state pension, you will usually need more than 35, so check your forecast rather than counting years. A year that does not count is a permanent hole unless you fill it, and you can generally only go back six years to do so.
So the sole trader who had a bad year, made £5,000 profit, and quite reasonably paid no National Insurance, has lost a year off their pension record without being told. At roughly £190 for the year, voluntary Class 2 is the cheapest pension contribution available in the UK by a wide margin. It is almost always worth paying.
This is genuinely one of the most valuable things an accountant can spot, and it only shows up if someone is looking at the profit figure with the pension record in mind.
Class 4, which is the one you actually pay
Class 4 is charged on profits at 6% between £12,570 and £50,270, and 2% on everything above £50,270.
Class 4 buys you nothing. It does not count towards your state pension or any benefit. It is a tax on profit that happens to be called National Insurance, and it sits on top of income tax at 20% or 40% on the same money. That is why the effective rate on self employed profit in the basic rate band is 26%, not 20%, and it is why people are surprised by their first bill.
What to do about it
If your profit for the year is under £7,105, decide deliberately whether to pay voluntary Class 2. Check your National Insurance record on the HMRC app first, because you may have the year covered by employment or credits already.
If you are claiming Child Benefit and one of you is not working, make sure the claim is in the non earning partner name. It carries National Insurance credits automatically and protects the pension record without paying anything.
Class 4 is collected through self assessment alongside your income tax, so it is part of the January bill rather than a separate demand.
Common questions
I am employed and self employed. Do I pay twice?
You pay Class 1 on the employment and Class 4 on the profits, but there are annual maxima that cap the total. It is worth checking rather than assuming, because it is not always applied automatically.
Does paying voluntary Class 2 get me anything else?
It counts towards the state pension and certain contributory benefits such as Maternity Allowance. For most people the pension year is the point.
Figures are for 2026/27 and checked against current HMRC guidance. If you had a low profit year and are not sure whether it counts, get in touch and we will look at your record.
Related services and guides
Self Assessment service Allowable expenses guide Self employed NI