If you are self-employed and your profits are above £12,570, you may need to pay Class 4 National Insurance, so it is important to understand how the rates and rules apply to you.
Self-employed individuals are usually required to pay Class 4 National Insurance contributions (NICs) if their annual profits exceed £12,570. These contributions are calculated based on profits and are used to fund various state benefits, including the state pension, unemployment benefits and the National Health Service (NHS).
For the current 2025-26 tax year, Class 4 NIC rates are set at 6% on profits between £12,570 and £50,270, with an additional 2% charged on profits above £50,270.
Certain groups are exempt from paying Class 4 NICs, including:
- Individuals under 16 at the start of the tax year.
- Individuals over State Pension age at the start of the tax year. If someone reaches State Pension age during the tax year, they remain liable for Class 4 NICs for the entire tax year.
- Trustees and guardians of incapacitated individuals are exempt from paying Class 4 NICs on that income.
The Class 4 NIC rate is lower than the corresponding rate for employees, who pay 8% on the same income levels. Both employees and the self-employed contribute 2% on income above the higher rate threshold.
The majority of individuals pay Class 4 National Insurance via self-assessment.
