Class 4 National Insurance: What Self-Employed People Pay

Class 4 national insurance is a charge on self-employed profits above the lower profits limit. For the 2026/27 tax year the class 4 national insurance rates are 6% on profits between £12,570 and £50,270, then 2% on anything above £50,270. The charge is collected through your self assessment tax return, alongside your income tax.

What the money buys depends on the class. Class 1, class 2 and class 3 contributions build entitlement to the state pension and other contributory benefits. Class 4 does not.

The National Insurance Manual puts it plainly: class 4 contributions go into the National Insurance Fund and help spread the cost of benefits for the self employed, but they earn no entitlement of their own.

A self employed plumber handing over £1,600 a year in class 4 national insurance contributions is not, through that payment, buying a qualifying year towards a pension.

The pension is being protected somewhere else, and the sections below set out where.

Who pays class 4 national insurance

Liability follows self-employment rather than income in general. The charge lands on profits from a trade, profession or vocation, which means it reaches:

• Sole traders whose taxable profits for the year rise above £12,570.
• Partners in a partnership or LLP, each on their own share of the profits.
• Anyone running more than one trade, since profits from separate trades are combined before the threshold is applied.

Rental income usually sits outside this. GOV.UK flags landlords as a group with special rules, so letting property alongside a trade is worth checking rather than assuming. Examiners, moderators and invigilators are a separate case again: they can be liable to Special Class 4 National Insurance, which is not collected through self assessment at all.

There is no separate sign-up. Registering with HMRC as self employed covers income tax and national insurance for self employed people in one go.

What counts as profits for class 4 NIC

Profits, not turnover. The test is income minus expenses: whatever the trade brings in, less what it costs to run. That post-expenses figure is the one the thresholds bite on, which is why two traders invoicing the same amount can owe very different sums.

Three things move the number:

• Allowable business expenses come off before the calculation is made.
• The £1,000 trading allowance can be claimed instead of actual expenses, which suits anyone whose real costs fall below it, though it cannot be used against partnership profits.
• Trading losses can reduce the taxable profits national insurance is charged on, and the class 4 figure can end up differing from the income tax figure as a result.

That’s the one to take to an accountant if it applies to you. For most sole traders the profit shown on the self-employment pages of the return is the one the charge is based on.

How much is class 4 national insurance

The charge is banded, working the way income tax does. GOV.UK sets the class 4 national insurance thresholds and rates for 2026/27 as follows:

• Profits up to £12,570: nothing to pay.
• Profits between £12,570 and £50,270: 6%.
• Profits above £50,270: 2%.

The £12,570 figure is the class 4 lower profits limit, also written as the class 4 lower profits threshold, and £50,270 is the class 4 upper profits limit.

Crossing the upper limit doesn’t move your whole profit onto a different rate. Only the slice above £50,270 is charged at 2%.

Older guides still quote 9%, and some quote 8%. Both were correct once. Anyone looking up the class 4 national insurance rate 2026/27 will find 6% as the main rate, following cuts that took effect in April 2024.

Treat any page quoting a main rate above 6% without naming a tax year as out of date and check it against current rates on .GOV.

Working out the bill on £40,000 of profit

The class 4 national insurance self employed traders owe is worked out once a year, on the whole year’s profit. Take a self employed designer with £40,000 of taxable profit, charged on the bands above. The first £12,570 carries no charge.

That leaves £27,430 in the 6% band, which comes to £1,645.80 for the year. Nothing sits above £50,270, so there is no 2% element at all.

Push the same designer to £55,000 and the 6% band fills up. £50,270 minus £12,570 is £37,700, charged at 6%, giving £2,262.00. The remaining £4,730 above the upper limit is charged at 2%, adding £94.60. Total class 4 for the year: £2,356.60.

Look at what happened between those two. Profit rose by £15,000 but the class 4 bill rose by only £710.80, because part of the extra profit fell above the upper limit where the rate drops to 2%.

The figure is produced automatically once the return is filed, so a class 4 national insurance calculator is a way of sense-checking rather than something you need before you file.

Class 4 national insurance buys you no benefits

National insurance sounds like a contribution towards something, and for three of the four classes it is. So what is class 4 national insurance actually funding?

The National Insurance Manual states that class 4 contributions do not count for contributory benefits or the state pension.

So the class 4 national insurance state pension link that the name implies is not there.

What actually builds your national insurance record is:

• Class 2 contributions, whether paid or treated as paid.
• Class 1 NIC deducted from employment earnings.
• Voluntary class 3 national insurance.

Those are what produce national insurance qualifying years, and qualifying years are what the basic state pension, maternity allowance, bereavement benefits and employment and support allowance all rest on.

A minimum of ten qualifying years is needed for any new state pension and usually thirty-five for the full rate, though individual records vary.

Anyone weighing voluntary national insurance contributions is weighing class 2 or class 3, never class 4.

Class 2 and class 4 national insurance differ

Self employed national insurance contributions come in two classes, and they don’t behave alike at all.

Class 2 used to be a flat weekly payment sitting on top of class 4. April 2024 changed that. Where profits reach the small profits threshold, £7,105 for 2026/27, the record is credited as though class 2 had been paid, so no money actually leaves your account.

Below that threshold there is no liability, but voluntary class 2 national insurance can be paid weekly, at £3.65, to keep the record running.

The split is the point: class 2 protects the record, class 4 does not. A trader with £30,000 of profit pays class 4 national insurance contributions of £1,045.80 and gets the qualifying year from the class 2 that costs nothing.

Any article describing class 2 as a separate deduction on your bill is describing the pre-2024 system.

Who is exempt from class 4 national insurance

Being under the threshold isn’t the same as being exempt. A trader with £9,000 of profit simply is not liable. Exemption is a defined status, and the National Insurance Manual lists three groups:

• Anyone under 16 on the first day of the tax year.
• Anyone already past state pension age on that same date.
• Trustees, executors and administrators, on profits received in that capacity.

The second one is a snapshot taken on a single date, not a switch that flips on your birthday. Reaching state pension age partway through a tax year does not end liability for it.

The guidance is explicit on the point: the whole year stays liable, with the exemption running from the following 6 April.

A class 4 national insurance exemption is claimed on the tax return itself rather than by separate application.

Paying class 4 NIC through self assessment

How to pay class 4 national insurance is a shorter question than it looks, because there’s no separate bill and no separate payment date.

Class 4 NIC self assessment works as one calculation: the profit figures from your return feed the bands, and the result is added to your income tax.

The dates that matter:

• The class 4 national insurance payment deadline is 31 January following the end of the tax year, roughly ten months after it closes on 5 April.
• Where payments on account apply, class 4 national insurance payments on account are folded into the two instalments due on 31 January and 31 July.
• Class 2 is not included in payments on account, which is why a January bill can arrive higher than half the previous year’s total.

Your class 4 national insurance self assessment tax return figure appears on the tax calculation, shown as an SA302. That page separates the income tax from the national insurance.

If you file under Making Tax Digital

Sole traders and landlords earning more than £50,000 were brought into Making Tax Digital for Income Tax on 6 April 2026. Two further waves follow behind them, catching £30,000 in April 2027 and £20,000 the year after that.

The test is turnover before expenses rather than profit, so someone invoicing £52,000 can be caught while the profit that actually carries class 4 sits well below the figure that pulled them in.

What changes is the reporting, not the charge. Quarterly updates carry income and expenses only, and no national insurance is worked out at that stage. Class 4 is calculated once, at the final declaration that takes the place of the annual return.

The dates are untouched. The balancing payment still falls on 31 January and payments on account still fall on 31 January and 31 July, with class 4 inside them exactly as before.

Partnerships sit outside the MTD regime for now.

If you are employed and self employed

Holding a job alongside a trade does not remove the charge. Class 4 national insurance employed and self employed cases still produce a liability on the self-employed profits, on top of the class 1 already deducted through PAYE.

An annual maximum stops the two systems double-charging.

Where enough class 1 has already been paid, the Low Incomes Tax Reform Group explains that the class 4 charge can fall to 2% on all profits above £12,570 rather than 6%.

This is worked out automatically through self assessment. There is no application to make and no form to send: HMRC withdrew deferment of class 2 and class 4 from 2015/16 onwards, so anyone who has overpaid claims a refund after the year end instead of deferring in advance.

Before you file your return

Class 4 national insurance comes down to a short list. It applies to self-employed profits above the lower profits limit, at the main rate up to the upper profits limit and a reduced rate above it. It arrives with your income tax through self assessment rather than as a separate demand.

And it builds no entitlement of its own, which is the piece that changes what you do next.

If protecting qualifying years matters to you, class 2 and class 3 are where to look, not class 4. Checking your national insurance record through a personal tax account on GOV.UK will show where any gaps sit.

The class 3 national insurance guide covers the voluntary route in more detail.

Key Takeaways

The essentials, condensed to six points:

• Class 4 national insurance is charged on self-employed profits above the lower profits limit.
• For 2026/27 the rates are 6% on profits between £12,570 and £50,270 and 2% above £50,270, applied in bands rather than to the whole profit.
• Class 4 contributions do not count towards the state pension or any contributory benefit, according to the National Insurance Manual.
• Class 2, credited automatically once profits reach the small profits threshold, is what protects a self-employed person’s national insurance record.
• Exemption is limited to under-16s, those over state pension age at the start of the year, and trustees, executors and administrators.
• The charge is collected through self assessment and falls due by 31 January after the end of the tax year.

Common class 4 national insurance questions

The questions below cover ground that official guidance addresses separately from the main rules set out above.

How do you check your national insurance qualifying years?

A personal tax account on GOV.UK shows your national insurance record year by year, marking each one as full or as having a shortfall. The state pension forecast sits alongside it and gives the projected weekly amount based on the record so far.

The record is the thing to check before making any voluntary payment. A year that looks like a gap may already be covered by a credit, for example through child benefit or carer’s allowance, in which case paying again adds nothing.

Do limited company directors pay class 4 national insurance?

Director do not pay Class 4 on money taken out of the company. Class 4 attaches to profits from a trade, profession or vocation. A director’s salary is employment income under a different set of rules, so it carries class 1 rather than class 4, and dividends carry no national insurance at all.

The exception is running something separate alongside the company. Freelance work invoiced personally rather than through the company counts as self-employment, and any profit from it goes through the class 4 calculation in the normal way.

This is why moving between a limited company and sole trading changes the shape of a national insurance bill even when the take-home figure looks similar.

Do you pay class 4 national insurance on rental income?

In most cases no. Property income is taxed as property income rather than as trading profits, and class 4 applies to profits from a trade, profession or vocation.

Landlords do appear among the groups with special rules, and the test applied is a specific one rather than a question of size. Class 4 follows only where the activity amounts to a trade for income tax purposes. Scale on its own does not achieve that, and the ordinary work of a landlord, from arranging repairs to finding tenants and collecting rent, falls short of it.

What can tip the balance is attaching services to the letting. The published examples run to things like providing tenants with laundry facilities or an ironing service, and running a guest house or hotel will usually amount to a trade. Anyone in that territory should check their own position rather than assume either way.

When do the class 4 national insurance rates and thresholds change?

HMRC class 4 national insurance guidance notes that the Treasury reviews the percentages and profit limits each year, with changes normally announced in a Budget and taking effect from the following 6 April.

Rates for this class have moved more than once in recent years, which is why any figure quoted without a tax year attached should be treated with caution. The main rate stood at 9% before April 2024 and was cut twice.

Is there a class 4 national insurance calculator you can check your figure against?

GOV.UK runs a Self Assessment tax calculator, which used to be called the self-employed ready reckoner. Enter an estimated profit and it returns an indication of income tax and class 4 national insurance.

Two limits apply. The tool runs on a completed tax year rather than the one in progress, so check which year it is set to before comparing anything. It also assumes the standard personal allowance and no other income, and it ignores payments already made towards the next bill.

That makes it a budgeting tool rather than a check on an assessment. Where it disagrees with the tax calculation produced from your return, the calculation from your return is the one that counts.