How Class 2 and Class 4 National Insurance work for the self employed in 2026/27, the thresholds, protecting your State Pension, and how you pay.
National Insurance is one of the most confusing parts of being self employed, partly because the rules have changed a lot in recent years. Yet it matters, because your contributions build your entitlement to the State Pension and certain benefits. This guide explains how National Insurance works for the self employed in 2026/27, the rates, the thresholds, and how to protect your record.
As a sole trader you may come across two classes of National Insurance. Class 4 is the main one and is charged on your profits. Class 2 is a smaller, flat amount that historically protected your State Pension record. Employees pay a different class, Class 1, through their wages, so if you are both employed and self employed you may pay more than one class.
Class 4 is the main contribution for the self employed and is based on your profits. For 2026/27 it is charged at 6% on profits between £12,570 and £50,270, and at 2% on any profits above £50,270. If your profits are below £12,570 you pay no Class 4 at all. It is worked out automatically when you file your Self Assessment return and paid alongside your income tax.
Class 2 used to be a compulsory flat weekly charge, but the rules have softened. If your profits are above £7,105, you are now treated as having paid Class 2 without actually having to hand any over, so you still build up your entitlement to the State Pension and benefits. If your profits are below £7,105, you can choose to pay Class 2 voluntarily, at £3.65 a week, to keep your record complete. For many people on low profits this small voluntary payment is excellent value.
Your National Insurance record is what counts towards your State Pension. You generally need around 35 qualifying years for the full new State Pension, and at least 10 to get anything at all. Gaps in your record can reduce what you eventually receive, which is why protecting it, even with voluntary Class 2, can be worthwhile if your profits are low.
Many people have a job and a side business at the same time. In that case you may pay Class 1 National Insurance on your wages and Class 4 on your self employed profits. There is an annual maximum to stop you paying too much overall, and if you do overpay you can claim the excess back, so it is worth checking if you have significant income from both.
For the self employed, both Class 4 and any voluntary Class 2 are collected through Self Assessment, alongside your income tax, and due by 31 January. You do not pay National Insurance separately or monthly as an employee would. Keeping your profit figure accurate ensures the right contributions are recorded against your name.
Class 4 at 6% on profits between £12,570 and £50,270 and 2% above that. Class 2 is not compulsory above £7,105 of profit but can be paid voluntarily at £3.65 a week below that.
Only voluntarily. If your profits are above £7,105 you build your record without paying it. Below that you can choose to pay £3.65 a week to protect your State Pension.
Yes. Your National Insurance record builds your entitlement to the State Pension, with around 35 qualifying years needed for the full amount.
It is worked out and paid through your Self Assessment tax return alongside your income tax, by 31 January.
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