National Insurance and Self-Employment
National Insurance Contributions (NICs) fund the UK's state benefits and pension system. As a self-employed person, your NIC obligations are different from employees — you pay Class 2 and Class 4 contributions rather than the Class 1 contributions deducted automatically through PAYE.
Understanding how NI works is important for two reasons: it directly affects how much you owe HMRC each year, and it determines your entitlement to the State Pension and other contributory benefits. NI contributions are paid through Self Assessment alongside income tax.
Class 2 National Insurance
Class 2 NI is a flat-rate weekly contribution paid by self-employed workers. For 2025/26 the rate is £3.45 per week, which amounts to £179.40 per year. Class 2 applies if your self-employment profits exceed the Small Profits Threshold of £12,570.
Despite the small weekly amount, Class 2 is important because it is the mechanism by which self-employed people build entitlement to the State Pension and contributory Employment and Support Allowance (ESA). If your profits fall below £6,725 (the Small Profits Threshold), you can make voluntary Class 2 contributions to protect these entitlements — worth considering if you are in a low-income year.
Class 4 National Insurance
Class 4 NI is the main self-employed NI charge, calculated as a percentage of your annual profit:
| Profit Level | Class 4 NI Rate |
|---|---|
| Up to £12,570 | 0% |
| £12,571 – £50,270 | 9% |
| Above £50,270 | 2% |
Source: HMRC / gov.uk · Rates correct for 2025/26 tax year.
For a freelancer earning £40,000 profit, Class 4 NI would be calculated on £27,430 (£40,000 minus £12,570) at 9%, giving £2,468.70. Add Class 2 of £179.40 and the total NI bill is approximately £2,648. Use the NI calculator to model different profit levels.
National Insurance Threshold 2025/26
The National Insurance threshold for self-employed people aligns with the personal allowance. The Lower Profits Limit (LPL) is £12,570 — meaning neither Class 2 nor Class 4 NI applies on profits below this level. This alignment was introduced from 2022/23 to simplify the system.
The Upper Profits Limit (UPL), above which Class 4 NI drops to 2%, is £50,270 — matching the higher-rate income tax threshold. This means the highest marginal combined rate (income tax + Class 4 NI) between £12,570 and £50,270 is 29% (20% tax + 9% NI). See self-employed tax for the full combined rate picture.
Does National Insurance Count Towards State Pension?
Yes — qualifying years of National Insurance contributions count towards your State Pension entitlement. You need 35 qualifying years for the full New State Pension (currently £221.20 per week for 2024/25). You need a minimum of 10 qualifying years to receive any State Pension at all.
Self-employed Class 2 contributions count as qualifying years. If you have years where your profits were below the Small Profits Threshold and you did not make voluntary contributions, those years will not count. You can check your NI record and fill gaps through the HMRC online portal.
Employers NI — Does It Apply to Freelancers?
Employers NI (Class 1 Secondary) is paid by employers on the wages of their employees. If you are a sole trader or freelancer, you do not pay Employers NI on your own income — you pay Class 2 and Class 4 instead.
However, if you employ staff, you will owe Employers NI on their wages above the Secondary Threshold (currently £9,100 per year). The rate is 15% for 2025/26. Use our Employers NI calculator if you take on employees or have employees for a specific project.
National Insurance in Northern Ireland
NI contributions work identically in Northern Ireland as in the rest of the UK. Self-employed people in Northern Ireland pay the same Class 2 and Class 4 rates on the same thresholds. The only tax difference in Northern Ireland compared to England and Wales is the devolved income tax rate, which currently mirrors the UK rate.