Self-employed NI 2026/27

If you’re self-employed in the UK, your National Insurance is structured very differently from an employee’s. For 2026/27 you pay Class 4 NI at 6% on profits between £12,570 and £50,270, then 2% above. Class 2 NI is no longer compulsory — from April 2024, sole traders with profits above £7,105 automatically receive a NI credit (treated as having paid) without making any actual Class 2 payment. Below £7,105, you can volunteer £3.65 a week of Class 2 to protect your state pension qualifying year. This calculator handles both Class 2 and Class 4 across all profit levels and shows your annual NI bill alongside the implications for your state pension record.

How Class 4 works in 2026/27

Class 4 is the main self-employed NI charge. It’s calculated on trading profit (after expenses but before personal allowances). The bands:

Worked example: a sole trader with £40,000 profit pays Class 4 NI of (£40,000 − £12,570) Ã, 6% = £1,646.

A sole trader with £75,000 profit pays £37,700 Ã, 6% + £24,730 Ã, 2% = £2,262 + £495 = £2,757.

Note that the Class 4 rate is lower than employee NI (8% in the basic band vs Class 4’s 6%). This 2-percentage-point gap is one of the differences in tax treatment between employment and self-employment, alongside the absence of employer NI.

Class 2 since April 2024

Until 2024 Class 2 was a flat weekly rate (£3.45 in 2023/24) paid by all self-employed people with profits above the Small Profits Threshold. From April 2024 the rules changed:

• Profits at or above the Small Profits Threshold (£7,105 for 2026/27): you don’t pay Class 2 NI but you’re treated as having paid for state pension and contributory benefit purposes. The “credit without payment” applies automatically.
• Profits below the Small Profits Threshold (£7,105): you can volunteer £3.65 a week (£189.80 a year) of Class 2 to protect your state pension qualifying year. You can also volunteer if you have no profits or made a loss.

If you don’t volunteer Class 2 and your profits are below £7,105, you may end up with a gap in your NI record that reduces your future state pension. This is the main reason low-profit sole traders still consider voluntary Class 2.

State pension implications

Each tax year is either a “qualifying year” or not for state pension purposes. The current new state pension requires 35 qualifying years for the full amount (10 minimum for any pension). Each qualifying year you accumulate increases your eventual state pension proportionally.

For a sole trader, a tax year qualifies if:

• Profits are above £7,105 (automatic credit, no payment)
• Profits below £7,105 and voluntary Class 2 is paid
• Profits below £7,105 and a Specified Adult Childcare credit, Carer’s Credit or other credit applies

A tax year doesn’t qualify if profits are below £7,105 and no voluntary Class 2 is paid and no other credit applies. Over a working life, missing 5 years means losing 5/35 = 14% of the full state pension forever.

When you also have employment income

Many self-employed people also have an employed job — perhaps PAYE income from an early-career role they’ve kept. Both contribute to NI separately:

• Employed PAYE income pays Class 1 employee NI (8%/2%) on the employer’s payroll.
• Self-employed profit pays Class 4 NI (6%/2%) through Self Assessment.

The thresholds for each are independent — you don’t add together. A person with £30,000 employed salary and £30,000 self-employed profit pays:

• Employee NI on the £30,000 salary: (£30,000 − £12,570) Ã, 8% = £1,394
• Class 4 NI on the £30,000 profit: (£30,000 − £12,570) Ã, 6% = £1,046

For very high earners with both income types, Class 4 NI can be partially deferred to avoid overpayment when combined Class 1 NI from employment already covers the year’s annual maximum. Apply for deferment via form CA72A.

When you change from employee to self-employed mid-year

NI is calculated separately for each period. A taxpayer who is employed from April to September and self-employed from October to March pays:

• Class 1 employee NI on six months of employment income, calculated as if they had been employed all year (so the £12,570 threshold is annualised across the period of employment).
• Class 4 NI on the six months of self-employment profit, with the £12,570 threshold applied to the annualised figure (HMRC pro-rates the threshold to the period of self-employment).

The result is normally fair, though it can produce surprising figures if income is very lumpy in either job. The first Self Assessment return after going self-employed reconciles everything to the annual position.

Key takeaways

• Class 4 NI for 2026/27: 6% on profits £12,571 to £50,270, then 2% above.
• Class 2 is no longer compulsory — automatic credit at profits above £7,105, voluntary £3.65/week below.
• Missing a qualifying year reduces your state pension by 1/35th of the full amount, permanently.
• Self-employment NI is lower than employed NI (6% vs 8% in the main band) because there’s no employer NI either.
• People with both employed and self-employed income pay both Class 1 and Class 4 NI but can apply to defer one to avoid annual overpayment.

Frequently asked questions

Should I pay voluntary Class 2 if my profit is below £7,105? Usually yes, if you don’t have other ways to qualify for the year (employed earnings, NI credits as a parent or carer). £189.80 buys a qualifying year that would otherwise cost a five-figure sum to fill via voluntary Class 3 NI.

When do I pay Class 4 NI? Class 4 NI is paid as part of your Self Assessment bill, by 31 January following the tax year. Payments on account also apply (each is half the previous year’s tax + Class 4 NI bill). It’s not deducted at source — you pay it yourself in the lump.

Do I pay Class 4 NI on rental income? No. Rental income is investment income, not trading profit, so it doesn’t attract Class 4 NI. The exception is Furnished Holiday Lets that meet the (now-tightened) criteria, but the FHL regime was largely abolished in April 2025.

What’s Class 3 NI and should I pay it? Class 3 is voluntary NI paid to fill gaps in your NI record. The rate is significantly higher than Class 2 — around £18 a week for 2026/27 vs £3.65 for Class 2. Most self-employed people should use voluntary Class 2 rather than Class 3 if they’re eligible. Class 3 is mainly for people who can’t use Class 2 (e.g. expats, those with no qualifying activity in the UK).