Class 2 and Class 4 National Insurance for the self-employed, explained
Class 2 and Class 4 National Insurance for the self-employed, explained: the difference, the 2024 change making Class 2 free above the SPT, and Class 4 rates.
Quick answer: As a sole trader you have two National Insurance classes. Class 4 is the one you pay: 6% on profits from £12,570 to £50,270, then 2% above. Class 2 is now effectively £0 once your profits clear the Small Profits Threshold — your record is simply treated as paid. Below that threshold, Class 2 is voluntary. See your NIC in your full tax picture with the self-employed tax calculator.
National Insurance for the self-employed used to mean two separate bills. Since a 2024 change, one of them has effectively vanished for most people — but it still matters for your State Pension. Here is exactly how Class 2 and Class 4 work, who pays what, and why the distinction is worth understanding.
The two classes at a glance
| Class 2 | Class 4 | |
|---|---|---|
| What it's for | Building your State Pension and contributory benefit entitlement | A profit-based contribution, like a second layer of income tax |
| How it's charged | Treated as paid above the Small Profits Threshold; voluntary below it | A percentage of your profits |
| Cost above the SPT | £0 (record treated as paid) | 6% then 2% (see below) |
The headline: Class 4 is the one that costs you money; Class 2 is mostly about protecting your record and, for most sole traders, no longer involves a payment at all.
Class 2: the 2024 change that made it (mostly) free
This is the part that has changed and confuses people most.
Historically, the self-employed paid a flat weekly Class 2 charge to build up qualifying years towards their State Pension. Following the 2024 reform, that flat charge no longer applies in the way it used to.
Now, if your profits are above the Small Profits Threshold (SPT), Class 2 is treated as paid — your National Insurance record is credited as though you had paid it, but you hand over nothing. You still build up your qualifying year for the State Pension and contributory benefits; you just don't pay for it. The Small Profits Threshold is £6,845 in 2025/26 and £7,105 in 2026/27.
Voluntary Class 2 below the threshold
If your profits are below the Small Profits Threshold, your record is not automatically credited. In that situation Class 2 becomes voluntary: you can choose to pay it to protect your State Pension and benefit entitlement. The voluntary rate is:
- £3.50 per week in 2025/26.
- £3.65 per week in 2026/27.
Over a full year that is a modest sum, and for many low-profit or part-time sole traders it can be well worth paying to avoid a gap in their National Insurance record. If you have had a low-profit year, it is worth checking whether a voluntary Class 2 payment would protect a qualifying year.
Class 4: the contribution you actually pay
Class 4 NIC is charged on your profits and works in bands, much like income tax:
| Profit band | Class 4 rate |
|---|---|
| Up to £12,570 | 0% |
| £12,570 – £50,270 | 6% |
| Above £50,270 | 2% |
So your first £12,570 of profit is free of Class 4. Between £12,570 and £50,270 you pay 6%. Above £50,270 the rate drops to 2% — meaning very high earners pay a smaller National Insurance percentage on their top slice of profit (though their income tax rate rises to 40% there).
Worked example: £30,000 profit
- 6% on profit from £12,570 to £30,000 (£17,430) → £1,045.80 Class 4.
- Class 2: above the SPT, so treated as paid — £0.
Worked example: £60,000 profit
- 6% on £12,570 to £50,270 (£37,700) → £2,262.
- 2% on £50,270 to £60,000 (£9,730) → £194.60.
- Total → £2,456.60 Class 4.
- Class 2: above the SPT, so treated as paid — £0.
These tie in with the income tax figures in our guide on how much tax and National Insurance you pay self-employed, where the same profit levels are worked through in full.
The self-employed tax calculator combines your income tax and Class 4 NIC automatically, so you can see the whole bill from one profit figure.
Why the distinction matters
It is easy to lump "National Insurance" together, but Class 2 and Class 4 answer two different questions:
- Class 4 answers "how much will I pay?" — it is a real cost scaling with your profits.
- Class 2 answers "is my State Pension record protected?" — above the SPT it is, for free; below it, you may need to act.
For most working sole traders, the practical upshot is simple: you pay Class 4 on your profits, and your Class 2 record looks after itself. The group that needs to pay attention is anyone with profits below the Small Profits Threshold, who should weigh up paying voluntary Class 2 to keep their pension record intact.
How and when you pay
Class 4 NIC is collected alongside your income tax through Self Assessment — or, once you are in Making Tax Digital, through your final declaration. Payment dates are unchanged: the balancing payment on 31 January, with payments on account on 31 January and 31 July where relevant. The MTD quarterly updates themselves carry no payment — see the MTD quarterly deadlines guide.
Frequently asked questions
What's the difference between Class 2 and Class 4 National Insurance? Class 4 is a profit-based contribution you actually pay (6% then 2%). Class 2 is about protecting your State Pension record — above the Small Profits Threshold it is treated as paid for free; below it, it is voluntary.
Do I still have to pay Class 2 National Insurance? If your profits are above the Small Profits Threshold (£7,105 in 2026/27), no — your record is treated as paid and you pay nothing. Below that threshold, Class 2 is voluntary at £3.65 per week in 2026/27.
What are the Class 4 National Insurance rates for 2026? 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270.
Should I pay voluntary Class 2 if my profits are low? It can be worthwhile. If your profits are below the Small Profits Threshold, paying voluntary Class 2 (£3.65/week in 2026/27) protects your qualifying year for the State Pension and contributory benefits.
Why does Class 4 drop to 2% above £50,270? National Insurance is designed so the top slice of higher profits is charged at a lower rate, mirroring how employee NIC works. Note that income tax rises to 40% over the same threshold.
For most sole traders, Class 4 is the cost and Class 2 quietly looks after your pension record. If your profits are low, check whether voluntary Class 2 is worth paying — and use the self-employed tax calculator to see your full income tax and NIC bill in one place.
Guidance only, not tax advice. Based on HMRC rules as at June 2026.
Related guides: How much tax and National Insurance do I pay self-employed? · MTD quarterly deadlines for 2026/27 · Do I need to follow MTD? (scope checker)