National Insurance Contributions

National Insurance can be simply seen as the system of contributions which are paid by workers and employers towards the cost of some state benefits. It was originally a system against illness and unemployment, but has since expanded to include pensions. It was introduced in the United Kingdom as part of the National Insurance Act 1911, and has been amended several times over the years (such as in 1948 when the NHS was launched).

Put simply, you pay a certain amount of your profit towards these charges. For employed individuals, your employer usually calculates these and deducts them automatically.

National Insurance is different to Income Tax and therefore both may be charged depending on your business profits.

Types of National Insurance

There are a number of different types of National Insurance. If you’re self-employed, the one you pay is Class 4. Since 6 April 2024, nobody has to pay Class 2, but it still matters for your State Pension (see below).

If you’re employed, you pay Class 1.

If you’re self-employed and employed, your employer will deduct Class 1 from your salary, and you may need to pay Class 4 on your self-employed profit through your tax return. The two are worked out separately.

National Insurance Class 1

• Class 1: This is paid by employees (not self-employed) who earn more than £242 a week (2026/27), and who are under State Pension age.
• Class 1A or 1B: These are paid by employers directly to HMRC.

National Insurance Class 2

• If your profits are at or above the small profits threshold, Class 2 is treated as paid. You pay nothing, and the year still counts towards your State Pension.
• If your profits are below the threshold, you don’t have to pay anything, but you can choose to pay Class 2 voluntarily to protect your National Insurance record (see voluntary contributions at the bottom of this page).

National Insurance Class 3

• These are voluntary contributions. You can pay these to fill gaps in your National Insurance record. For 2026/27, Class 3 is £18.40 a week.

National Insurance Class 4

• Paid by self-employed people on profits over £12,570 a year.

What are the National Insurance rates?

If you’re self-employed, these are the figures that apply to you:

HMRC works out your Class 4 automatically from your tax return and adds it to your income tax bill, so you pay it all through Self Assessment. It’s also included in your payments on account.

Class 4 works in a similar way to the personal allowance for income tax. The first £12,570 of your profit has no Class 4 on it, and you only pay on the profit above that.

Example: Anne has profits of £18,000 in the 2026/27 tax year. The first £12,570 has no Class 4 on it, so the rest is subject to Class 4 as below:

£18,000 – £12,570 = £5,430 subject to Class 4

6% of £5,430 is £325.80.

Anne’s profits are over £7,105, so Class 2 is treated as paid. She pays nothing for it, and the year counts towards her State Pension. Her total National Insurance for the year is £325.80.

Voluntary contributions

It is possible to pay voluntary contributions. To some people, this may seem very unusual (why would you want to pay more than you have to?), however there are benefits to doing so.

• It can increase the bereavement benefits for your spouse or civil partner
• You can increase or top-up your State Pension
• If you don’t qualify for the State Pension and need to top-up years.

If your profits are below the small profits threshold, voluntary Class 2 (£3.65 a week in 2026/27) is much cheaper than Class 3 (£18.40 a week). It isn’t right for everyone, though. You might already get National Insurance credits, or already have enough qualifying years, so check your National Insurance record first.

HMRC have a full guide on voluntary contributions, and the current rates are on gov.uk’s self-employed National Insurance rates page.