Class 4 National Insurance: Self-Employed NI Explained
Class 4 National Insurance is the NI charge on self-employed profits: 6% on profits between £12,570 and £50,270, and 2% above that, all paid through Self Assessment.
Key takeaways
- Class 4 NI in 2026/27 is 6% on profits from £12,570 to £50,270, and 2% on profits above £50,270.
- It is paid through Self Assessment, alongside income tax, not through payroll.
- Compulsory Class 2 NI ended in April 2024; Class 4 itself buys no State Pension entitlement.
- Profits of £7,105 or more still count towards the State Pension because Class 2 is treated as paid.
- Class 4 is charged on profit, not turnover — allowable expenses reduce the bill directly.
Employees have their National Insurance deducted before they ever see it. Self-employed people face a different system, and its most confusing part is Class 4 National Insurance: a percentage charge on profits that arrives once a year through Self Assessment, sits next to the income tax bill, and is easy to mix up with the other NI classes. This guide separates Class 4 from the rest, shows the maths, and explains what it does and does not buy you.
All rates here are for the 2026/27 tax year, from 6 April 2026 to 5 April 2027. The Class 4 rates are unchanged from the previous year, and the main rate has been 6% since April 2024, when it was cut from 9%.
Who pays Class 4, and on what
Class 4 applies to self-employed profits from a trade, profession or vocation. That covers sole traders on their taxable profit and partners on their individual share of partnership profits. If you run more than one trade, the profits are combined before the thresholds are applied. Rental income usually sits outside Class 4, and employment income is dealt with under Class 1 instead, so someone who is both employed and self-employed can pay both classes on different income in the same year.
The crucial word is profits. Class 4 is charged on turnover minus allowable expenses, the same profit figure income tax uses. Every legitimate business expense — materials, software, a proportion of home costs, professional fees — reduces both your income tax and your Class 4 bill. Keeping clean expense records is therefore not just good bookkeeping; it is the single most effective way to reduce this charge.
The 2026/27 rates and thresholds
Class 4 has two rates. Profits up to £12,570, the Lower Profits Limit, attract no Class 4 at all. Profits from £12,571 to £50,270 are charged at 6%. Profits above £50,270 are charged at 2%. The lower limit matches the income tax personal allowance by design, and the upper limit matches the higher-rate income tax threshold, which makes the two charges easy to work out side by side.
Note what is missing: there is no employer equivalent here, so a self-employed person pays only their own Class 4 plus income tax.
Worked examples: £20,000, £40,000 and £55,000 of profit
On £20,000 of profit, only the slice above £12,570 is charged: £7,430 at 6% gives £445.80 of Class 4 for the year. On £40,000 of profit, the slice is £27,430 and the bill is £1,645.80. On £55,000, the 6% band fills completely — £37,700 at 6% is £2,262 — and the remaining £4,730 above the upper limit is charged at 2%, adding £94.60, for a total of £2,356.60.
Set those figures next to the income tax on the same profits and the combined bill becomes clear. On £40,000 of profit, income tax at 20% on the slice above £12,570 is £5,486, so tax plus Class 4 comes to £7,131.80 before any payments on account.
Class 2 and Class 4 are not the same thing
Class 2 used to be the flat weekly NI payment self-employed people made on top of Class 4. From 6 April 2024, compulsory Class 2 ended. If your profits reach the Small Profits Threshold of £7,105 in 2026/27, your record is credited as though Class 2 had been paid, so the year still counts towards your State Pension at no cost. Below that threshold there is no liability, but you can choose to pay voluntary Class 2 at £3.65 a week to protect your record.
Class 4, by contrast, buys no entitlement of its own. Paying Class 4 does not add a qualifying year to your State Pension record and does not build entitlement to contributory benefits; that protection comes from the Class 2 credit described above. The distinction matters when you check your National Insurance record: a year with a large Class 4 bill but profits below the Small Profits Threshold is not automatically a qualifying year.
How Class 4 is actually paid
There is no separate sign-up or payment process for Class 4. Registering with HMRC as self-employed covers income tax and National Insurance together, and your Self Assessment return calculates both charges from the same profit figure. The bill is due by 31 January after the tax year, with a second payment on account due by 31 July if you owe more than a set amount. Keep money aside as you earn — a common rule of thumb is to set aside 25 to 30% of profit for tax and Class 4 combined, then adjust once your first return shows your real rate.
If you are also employed, tell HMRC: the employed and self-employed thresholds interact, and you may be able to defer or adjust Class 4 where your combined earnings cross the limits. And if your profits are volatile, remember Class 4 is annual. A bumper year followed by a quiet one is charged on each year separately, with no averaging — another reason to keep a tax reserve rather than spending the good months in full. For the employee side of the same system, see our guide to employers NI, and check your take-home position with the UK salary calculator.
Sources & further reading
- GOV.UK, Self-employed National Insurance ratesClass 4 rates and thresholds, voluntary Class 2, Small Profits Threshold (curl: 200, 1 Nov 2026).
- GOV.UK, Rates and allowances: National Insurance contributions2026/27 Class 4 profit limits (curl: 200, 1 Nov 2026).
This article is general information only, not financial advice.