National Insurance for the Self-Employed: 2026 Guide

National Insurance for the Self-Employed: An Overview

Self-employed people pay National Insurance differently from employees. Rather than having it deducted at source through PAYE, you pay it through your annual Self Assessment tax return. The main class for self-employed people with profits above the Small Profits Threshold is Class 4 NI.

Class 4 National Insurance Rates (2026/27)

Class 4 NI is charged on your taxable profits:

• 9% on profits between the Lower Profits Limit (£12,570) and Upper Profits Limit (£50,270)
• 2% on profits above £50,270

So if your profit is £35,000, you pay: (£35,000 − £12,570) × 9% = £2,019 in Class 4 NI.

What Happened to Class 2 NI?

Class 2 NI — a flat weekly contribution previously paid by self-employed people with profits above the Small Profits Threshold — was abolished from April 2024. Most self-employed people no longer need to worry about it. If you had profits below the Small Profits Threshold and voluntarily paid Class 2, you now make voluntary Class 3 contributions instead to protect your State Pension.

National Insurance and Your State Pension

You need 35 qualifying years of National Insurance contributions to receive the full new State Pension (currently around £221 per week). Each tax year in which you pay Class 4 NI (or make voluntary contributions) counts as a qualifying year.

Check your NI record on gov.uk to see how many qualifying years you have and identify any gaps. Filling gaps voluntarily (at Class 3 rates) can be very cost-effective if you're missing years that would otherwise reduce your State Pension.

How NI Is Calculated on Your Self Assessment Return

You don't calculate or pay Class 4 NI separately — HMRC calculates it automatically based on the profit figures you report on your Self Assessment return. The NI due is added to your Income Tax and paid by the same 31 January deadline.

NI for Limited Company Directors

Company directors paid a salary pay employee and employer National Insurance through payroll, not through Self Assessment. One reason directors often take a low salary is to minimise NI — the employer NI rate is 13.8% above the Secondary Threshold (£9,100 for 2026/27), which the company pays in addition to the employee contribution. Dividends do not attract NI at all, which is a significant advantage of the director-shareholder structure.

Budgeting for NI

When setting your tax reserve rate, ensure it accounts for both Income Tax and Class 4 NI. At profits between £20,000 and £50,000, NI alone can be £700–£3,400 per year. For a basic rate taxpayer with £35,000 profit, combined Income Tax and NI represents roughly 27% of profit — closer to 30% once you include the Personal Allowance and NI thresholds in the calculation.

The simplest approach: set aside 28–30% of every payment and you'll comfortably cover both liabilities with a small buffer.