National Insurance for the self-employed UK 2026/27 | AccountingStack

Self-employed people in the UK pay National Insurance differently from employees. Rather than having NI deducted through PAYE, sole traders and partners pay two classes of NI through their Self Assessment tax return: Class 2 (which protects your State Pension entitlement) and Class 4 (an additional tax on self-employment profits). Understanding how both work — and when to take action on gaps — matters throughout your working life.

Overview: how NI works for the self-employed

The NI landscape for self-employed people changed significantly in April 2024. Class 2 NI — previously a fixed weekly charge — was abolished as a compulsory payment. You no longer receive a Class 2 NI bill through Self Assessment. Instead:

• If your profits are above the Small Profits Threshold (£6,725 for 2026/27), you receive automatic Class 2 NI credits as part of your Self Assessment — your State Pension record is protected without any additional payment.
• If your profits are below £6,725, you can pay voluntary Class 2 NI to protect your State Pension record. This is much cheaper than voluntary Class 3 NI.
• Class 4 NI continues unchanged — a percentage-based charge on your taxable profits, calculated through Self Assessment alongside your Income Tax.

Class 4 NI does not build entitlement to the State Pension or other contributory benefits. It is, in effect, a surtax on self-employment income that funds the NHS. Only Class 2 contributions and credits affect your benefit entitlement.

Class 2 NI — credits and voluntary payments

From April 2024, Class 2 NI operates as a credit system rather than a charge. The key thresholds for 2026/27 are:

Voluntary Class 2 payments

If your profits fall below £6,725, you can elect to pay voluntary Class 2 NI at £3.50 per week for 2026/27 (£182 per year). This is significantly cheaper than Class 3 voluntary NI (£18.40 per week — £957 per year). Paying voluntary Class 2 NI is therefore the most cost-effective way to protect your State Pension record in a year of low earnings.

You elect to pay voluntary Class 2 NI through your Self Assessment tax return. If you do not make this election, HMRC will not automatically bill you — you need to actively opt in each year your profits are below the Small Profits Threshold.

Class 4 NI — rates and thresholds 2026/27

Class 4 NI is charged on taxable self-employment profits. The rates and thresholds for 2026/27 are unchanged from 2025/26:

The Lower Profits Limit (£12,570) aligns with the Income Tax Personal Allowance. The Upper Profits Limit (£50,270) aligns with the basic rate Income Tax band — the same point at which employee NI drops from 8% to 2%. The 6% Class 4 rate is lower than the employee Class 1 rate of 8%, reflecting the fact that self-employed people do not receive Statutory Sick Pay, Statutory Maternity Pay, or redundancy protection.

How Class 4 NI is calculated

Class 4 NI is charged on your taxable self-employment profits — the same figure used for Income Tax after allowable business expenses, capital allowances, and any losses brought forward have been deducted. It is not charged on your turnover.

Worked example: a sole trader has business turnover of £75,000 and allowable expenses of £18,000. Taxable profit is £57,000.

• Class 4 NI on the band £12,570 to £50,270: (£50,270 minus £12,570) × 6% = £37,700 × 6% = £2,262
• Class 4 NI on the band above £50,270: (£57,000 minus £50,270) × 2% = £6,730 × 2% = £135
• Total Class 4 NI: £2,397

This would be collected alongside the Income Tax due on £57,000 of profit (minus the £12,570 Personal Allowance), all through the Self Assessment payment schedule.

When and how to pay

Class 4 NI is calculated automatically when you file your Self Assessment return. You do not pay it separately — it forms part of your total Self Assessment bill alongside Income Tax. The payment schedule is:

• 31 January (in-year): first payment on account (50% of your previous year's combined IT and Class 4 NI bill)
• 31 July: second payment on account (the other 50%)
• 31 January (following year): balancing payment (any shortfall after the two payments on account) plus the first payment on account for the new year

If your profits vary significantly year on year, you can apply to reduce your payments on account — but if you reduce them too far and your actual liability is higher than expected, HMRC charges interest on the shortfall from 31 January.

If you are newly self-employed in your first year of trading, you do not pay payments on account until your first 31 January deadline after filing. The full first year's liability is due in one payment at that point, which can be a significant cash flow shock if you have not set aside the funds throughout the year. Set aside approximately 30% of your profit throughout the year to cover Income Tax and Class 4 NI combined.

NI and the State Pension

To receive the full new State Pension (£221.20 per week in 2025/26 — rising with the triple lock each year), you need 35 qualifying years of NI contributions or credits. Each tax year in which you receive Class 2 NI credits (or pay Class 2 or Class 3 NI voluntarily) counts as a qualifying year, provided contributions or credits meet the minimum threshold.

You need a minimum of 10 qualifying years to receive any State Pension. Between 10 and 35 qualifying years, you receive a proportionate amount — 20 qualifying years gives you 20/35 of the full pension.

A key difference from employment: Class 4 NI, which you pay on profits above £12,570, does not build State Pension entitlement. Only Class 2 NI and credits do that. This is why monitoring your NI record and taking action on gaps is important — simply paying a large Class 4 NI bill does not automatically give you qualifying years.

Check your NI record and State Pension forecast through your HMRC Personal Tax Account at GOV.UK. The forecast shows how many qualifying years you have, how many more you need for the full pension, and whether gaps exist.

NI credits when self-employed

Beyond the automatic credits for self-employed profits above £6,725, you may also receive NI credits in other circumstances that run alongside your self-employment:

• Child Benefit for a child under 12: claiming Child Benefit in your name gives you automatic Class 3 NI credits, protecting your State Pension record during years with low self-employment income.
• Caring for a disabled person: if you receive Carer's Allowance or are an approved foster carer, you receive NI credits.
• Jury service: credits are available for periods of jury service.
• Specified Adult Childcare Credits: if you care for a grandchild or other relative's child under 12 while the parent is working, you may be able to claim credits transferred from the parent's NI record.

If you have years with low self-employment income and one of the above credits applies to you, it is worth checking whether the credit has been applied to your record — you may have qualifying years you were not aware of.

Filling gaps in your NI record

If you have gaps in your NI record — tax years in which you neither paid NI nor received credits — you can fill them with voluntary contributions. Self-employed people have two options:

Voluntary Class 2 NI (for self-employment gaps)

If you were self-employed in a year with profits below the Small Profits Threshold and did not elect to pay Class 2 NI at the time, you may be able to pay backdated voluntary Class 2 NI for that year at the much lower Class 2 rate (£3.50 per week for 2026/27 — around £182 per year). This is only available where you were actually self-employed in that year. Contact HMRC to confirm whether Class 2 NI is available for specific past years, as this is not always straightforward.

Voluntary Class 3 NI (for any gap)

Class 3 voluntary NI can fill gaps regardless of your employment or self-employment status in the year. The rate for 2026/27 is £18.40 per week (£957 per year). You can generally fill gaps going back six tax years, though HMRC has extended this deadline periodically for years approaching a State Pension age cliff edge — always check GOV.UK for the current position before assuming an older gap is unrecoverable.

Is filling a gap worthwhile? For someone with fewer than 35 qualifying years and more than 10 years to State Pension age, each extra qualifying year bought at £957 adds approximately £6.31 per week (£328 per year) to the State Pension. The payback period is under three years — making it one of the most reliable investments available. Use the HMRC forecast to check your specific position.

NI for partners in a partnership

If you operate as a partner in a business partnership (rather than as a sole trader), the NI rules are the same as for sole traders. Each partner pays Class 4 NI on their share of the partnership profit, and each partner receives Class 2 NI credits based on their own profit share. There is no employer NI in a partnership structure — the partners are not employees of the partnership.

If the partnership has a corporate partner (a limited company partner), the company pays Corporation Tax on its share of profit rather than NI. The individual partners pay NI only on their personal profit shares.

Self-employed and employed at the same time

If you have both employment income and self-employment income in the same tax year, you pay both employee NI (Class 1, through PAYE on your employment income) and Class 4 NI (on your self-employment profits). This can result in overpaying NI overall, because each system applies its thresholds independently.

HMRC operates a maximum NI contribution cap. If your combined NI contributions exceed the annual maximum, you can claim a refund through your Self Assessment return. This is handled automatically if you file Self Assessment — HMRC calculates the overpayment and either refunds it or reduces your Class 4 NI bill accordingly. You do not need to do anything extra to claim this.