Class 4 National Insurance is the main NI charge for self-employed individuals in the UK. Unlike Class 1 NI paid by employees, Class 4 is calculated on annual profits and paid through Self Assessment. Class 2 NI was abolished from April 2024, so Class 4 is now the only NI charge for most self-employed people.
Class 4 NI Rates 2025/26
- Lower Profits Limit (LPL): £12,570
- Upper Profits Limit (UPL): £50,270
- Rate on profits between LPL and UPL: 6%
- Rate on profits above UPL: 2%
- Class 2 NI: Abolished from April 2024
Class 4 NI Calculator
What is Class 4 National Insurance?
Class 4 NI is a profit-based National Insurance charge for self-employed individuals, including sole traders and partners in trading partnerships. It is calculated as a percentage of annual profits above the Lower Profits Limit. Class 4 does not contribute to the State Pension or most contributory benefits — it is effectively a tax on self-employment income charged through the NI system.
Before April 2024, self-employed people also paid Class 2 NI — a flat weekly amount that provided State Pension entitlement. Class 2 was abolished from April 2024. To maintain State Pension qualifying years, self-employed individuals with profits below the Small Profits Threshold may need to pay voluntary Class 3 NI contributions.
How the Class 4 Calculation Works
The Class 4 charge is calculated on profits between the Lower Profits Limit (£12,570) and the Upper Profits Limit (£50,270) at 6%, and on any profits above the UPL at 2%. There is no upper cap on the 2% rate, so every pound of profit above £50,270 incurs a 2% charge.
For 2025/26:
- On profits between £12,570 and £50,270: 6% = maximum of £2,264 in this band
- On profits above £50,270: 2% (no limit)
If your profits are £45,000, Class 4 NI = (£45,000 − £12,570) × 6% = £32,430 × 6% = £1,945.80.
Class 4 NI and Pension Contributions
Personal pension contributions made by a self-employed individual do not automatically reduce profits for Class 4 NI purposes. They reduce adjusted net income for income tax purposes, potentially saving 20%, 40% or 45% in income tax depending on the rate band. To reduce Class 4 NI, the pension contribution would need to be deducted as an allowable business expense, which is not possible for personal contributions — only employer contributions to a workplace scheme can be deducted this way.
This is an important distinction for tax planning: a £10,000 pension contribution by a higher-rate taxpayer can save £4,000 in income tax but saves nothing on Class 4 NI unless structured as an employer contribution through a limited company or similar arrangement.
Class 4 NI and Employment Income
If you are both employed and self-employed, you pay Class 1 NI on employment earnings and Class 4 NI on self-employment profits. Both are calculated separately. However, there is an annual maximum NI contribution cap. If your combined NI (Class 1 plus Class 4) would exceed the annual maximum, you can apply for deferment of Class 4 NI. HMRC will confirm the correct amount via Self Assessment and issue a refund if you have overpaid.
Class 4 NI vs Employed NI
Employees pay Class 1 NI at 8% on earnings between £12,570 and £50,270, and 2% above. The self-employed pay Class 4 at 6% (LPL–UPL) and 2% above. The 2% difference in the main rate means that on profits of £45,000, a self-employed person pays approximately £648 less NI per year than an equivalent employee. However, employees receive employer NI contributions on their behalf (13.8% above the secondary threshold), which fund the same NI system.
Frequently Asked Questions
Class 4 NI is paid by self-employed individuals on their annual profits. In 2025/26 the rate is 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270.
The Lower Profits Limit is £12,570 and the Upper Profits Limit is £50,270. Class 4 NI is 6% between these limits and 2% on profits above £50,270.
No. Class 2 NI was abolished from April 2024. Self-employed individuals no longer pay the flat weekly Class 2 charge.
Personal pension contributions do not directly reduce profits for Class 4 NI. They reduce income tax by lowering adjusted net income. Employer contributions to a business pension scheme can reduce business profits, but personal contributions cannot.
Yes. If combined Class 1 and Class 4 NI would exceed the annual maximum, you can apply to HMRC to defer the Class 4 element. The excess is refunded via Self Assessment.
No. Class 4 NI does not build State Pension entitlement. State Pension qualifying years come from Class 1 NI (employment) or Class 3 voluntary contributions. Class 2 NI, which was abolished in 2024, previously gave State Pension credits.
Class 4 NI is calculated through Self Assessment and paid at the same time as income tax, by 31 January. Payments on account may also apply if your previous year's liability was £1,000 or more.
Class 4 NI is based on taxable profit from self-employment — turnover minus allowable expenses and capital allowances. It uses the same profit figure as for income tax.
No. Class 4 NI only applies to trading profits from self-employment. Rental income, dividends, and interest are not subject to Class 4 NI.
No. Class 4 NI is not affected by age in 2025/26. However, once you reach State Pension age, Class 4 NI stops from the start of that tax year.
Employees pay Class 1 NI at 8% on earnings between £12,570 and £50,270, and 2% above. Self-employed Class 4 rates are lower (6% and 2%), but Class 4 does not build State Pension entitlement.
Yes. If your profits are below the Small Profits Threshold (£6,725 in 2025/26), you will not automatically receive a qualifying year. You can pay voluntary Class 3 NI contributions (£17.45/week in 2025/26) to fill gaps and protect your State Pension entitlement.