National Insurance for the self-employed has changed significantly over the past few years. Class 2 NI — the flat weekly contribution that most self-employed people paid for years — was abolished from April 2024. This simplifies things for many people, but it also changes the way State Pension entitlement works for lower earners.
This guide explains exactly what NI the self-employed pay in 2026/27, how it is calculated, and what it means for your State Pension.
Class 4 National Insurance — The Main Self-Employed NI
Class 4 NI is calculated as a percentage of your self-employment profits above a threshold. It is calculated automatically through your Self Assessment tax return and paid alongside your income tax in January and July (as part of payments on account).
The Class 4 rates for 2026/27 are:
| Profit level | Class 4 NI rate |
|---|---|
| Below £12,570 (Lower Profits Limit) | 0% |
| £12,570 to £50,270 | 6% |
| Above £50,270 | 2% |
For a sole trader with profits of £40,000 in 2026/27:
- Profits between £12,570 and £40,000 = £27,430 subject to Class 4
- Class 4 NI: £27,430 × 6% = £1,646
Class 4 NI does not build State Pension entitlement. It is simply a tax on earnings above the threshold, contributing to general government revenues.
Class 2 NI — Abolished from April 2024
Prior to April 2024, self-employed people paid Class 2 NI at a flat rate of £3.45 per week (£179.40 per year) if their profits exceeded the Small Profits Threshold. This is no longer charged.
Class 2 had two functions: it was a revenue-raising measure and it was the mechanism through which self-employed people built entitlement to the State Pension and contributory benefits.
From April 2024, the State Pension entitlement function has been integrated into Class 4. Self-employed people with profits above the Lower Profits Limit (£12,570) automatically receive a qualifying year for the State Pension through their Class 4 NI payment, without paying any additional Class 2 charge.
What If Your Profits Are Below £12,570?
Self-employed individuals with profits between the Small Profits Threshold (£7,105 in 2026/27) and the Lower Profits Limit (£12,570) receive what is known as a deemed Class 2 credit. This means they are treated as having paid Class 2 NI for State Pension purposes, even though no payment is made. Their State Pension entitlement is protected without any additional cost.
If your profits fall below the Small Profits Threshold (£7,105), you do not automatically receive a qualifying year. You can choose to pay voluntary Class 3 NI contributions (£18.40 per week in 2026/27) to protect your State Pension entitlement. Whether this is worthwhile depends on how many qualifying years you already have and your proximity to State Pension age.
How NI Interacts With Employment Income
If you have both employment income (where you pay employee NI through PAYE) and self-employment income, you may pay NI twice — once through PAYE and once through Self Assessment. There is a maximum NI liability in any tax year, and if you overpay through the combination of Class 1 (employment) and Class 4 (self-employment), you can claim a refund through your Self Assessment return.
Your Self Assessment return calculates this automatically. If you prepare your own return, ensure the employment NI details from your P60 are entered correctly so the system can apply the right cap.
State Pension — How Many Qualifying Years Do You Need?
You need 35 qualifying years of NI contributions to receive the full new State Pension (currently £241.30 per week in 2026/27). You need at least 10 qualifying years to receive any State Pension at all.
A qualifying year is a tax year in which you paid (or were credited with) sufficient NI contributions. For self-employed people with profits above £7,105, every year of trading now counts as a qualifying year automatically.
If you have gaps in your NI record, you can check your State Pension forecast at gov.uk/check-state-pension and pay voluntary contributions to fill gaps. There are deadlines for filling certain gaps — checking your record and acting before you reach State Pension age is important.
NI and Pension Contributions
Pension contributions by a sole trader are not made through the employer mechanism, so they do not reduce NI in the same way employer pension contributions reduce employer NI for limited companies. However, pension contributions do reduce your adjusted net income for income tax purposes, potentially keeping you in a lower income tax band and below HMRC thresholds that affect Child Benefit and the personal allowance.
Client A was a self-employed photographer in Wembley with profits of £28,000. She had been filing her own returns but was confused after hearing that Class 2 had been abolished. She was concerned she was no longer building State Pension entitlement. We confirmed her profits were above the £7,105 threshold, meaning she receives a qualifying year automatically each year without any additional payment. Her Class 4 NI for 2025/26 was £927. No Class 2 charge applied. Her State Pension record shows a qualifying year for each year of trading.
Frequently Asked Questions
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