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Self-employed National Insurance – what do I pay?

Self-employed people pay National Insurance contributions (NICs) in two classes: Class 2 and Class 4. However, there are a few exceptions to this. For example:

• You will not pay NICs if you are under 16, or over the state retirement age
• You will not have to pay Class 2 NICs if you are a married woman who opted into the Reduced Rate scheme before it ended in April 1977
• Separate rules apply to share fishermen and voluntary development workers

Some other self-employed people don’t pay National Insurance contributions through Self Assessment. However, they may choose to make voluntary contributions, as explained below. These workers include:

• Examiners, moderators, and invigilators
• Religious ministers, providing that they receive no salary or stipend
• People who make investments, but without receiving a commission or fee, and not as a business
• Some people whose business involves land or property

What’s happening to Class 2 National Insurance contributions?

The government has announced that Class 2 NICs will be scrapped as part of a simplification of the tax treatment of the self-employed.

This was originally slated to happen in April 2018, but the government has now said that the move will be delayed for at least a year following widespread concern that the change would leave the poorest self-employed people worse off.

For the time being, self-employed people must pay both Class 2 and Class 4 National Insurance contributions unless they are exempt.

Self-employed National Insurance rates

Class 2 and Class 4 NICs are charged at different rates.

The Class 2 National Insurance contribution is a fixed amount of £2.85 a week. It is only charged if your annual profits are £6,025 or more.

Class 4 NICs are only charged if your profits are £8,164 or more a year. They are charged at a rate of nine per cent of profits between £8,164 and £45,000, and two per cent on profits over £45,000.

All of these rates are for the 2017/18 tax year.

Voluntary National Insurance contributions for the self-employed

Some people choose to make voluntary National Insurance contributions. You might do this because there are gaps in your National Insurance record which could affect your entitlement to the State Pension. This might be because you had small profits during periods of self-employment.

If you’re concerned that there may be gaps in your National Insurance record, you should ask for a copy using the tool on .Gov. You can then check to see if you are eligible to make voluntary contributions.

How to pay National Insurance contributions when self-employed

For most self-employed people, National Insurance contributions are paid through the Self Assessment process. You must file your return and pay your bill by 31 January every year. For more information, read our small business guide to Self Assessment tax returns.