How Much National Insurance for Self-Employed For 2025 - 2026?
- Adil Akhtar
- May 29
- 15 min read
Index:
The Audio Summary of the Key Points of the Article:
Understanding National Insurance for the Self-Employed in 2025-2026
So, you’re self-employed in the UK and wondering how much National Insurance (NI) you’ll need to fork out for the 2025-2026 tax year? Let’s get straight to the point. For the 2025-2026 tax year (6 April 2025 to 5 April 2026), self-employed individuals in the UK will primarily deal with Class 4 National Insurance Contributions (NICs), as Class 2 NICs have been abolished for most self-employed people starting from 6 April 2024. This is a big shift, and it simplifies things, but there are still key details you need to know to avoid surprises when filing your Self Assessment. Below, I’ll break down the rates, thresholds, and what they mean for your wallet, using the latest data from HMRC and GOV.UK, all verified as of April 2025.
What Are National Insurance Contributions for the Self-Employed?
Let’s start with the basics. National Insurance is your ticket to certain state benefits, like the State Pension, Maternity Allowance, and Employment and Support Allowance. If you’re self-employed, you’re responsible for paying your own NICs through your annual Self Assessment tax return. Unlike employees who have NI deducted automatically via PAYE, you’ve got to calculate and pay it yourself. The good news? The system has been streamlined, but it’s still on you to get it right.
Since April 2024, Class 2 NICs—those flat weekly payments of £3.45 for 2024-2025—are no longer mandatory for most self-employed folks. Instead, your NI contributions hinge entirely on Class 4 NICs, which are profit-based. This change, announced in the Spring Budget 2024, was designed to simplify the tax system and reduce the burden on low earners. But don’t relax just yet—there are still voluntary contributions to consider if your profits are low, and the Class 4 rates have their own quirks.
Class 4 NIC Rates and Thresholds for 2025-2026
Now, let’s talk numbers. For the 2025-2026 tax year, the Class 4 NIC rates remain the same as in 2024-2025, following the reductions introduced in Spring Budget 2024. Here’s how it breaks down:
Lower Profits Limit (LPL): £12,570. You don’t pay Class 4 NICs on profits below this threshold.
Upper Profits Limit (UPL): £50,270. You pay 6% on profits between £12,570 and £50,270.
Above the UPL: Profits over £50,270 are taxed at 2%.
Here’s a quick table to make it crystal clear:
Profit Range | Class 4 NIC Rate | Example Contribution (Annual) |
£0 - £12,570 | 0% | £0 |
£12,571 - £50,270 | 6% | £2,262 (on £37,700 profit band) |
Above £50,270 | 2% | £200 (on £10,000 above UPL) |
Source: GOV.UK, Self-employed National Insurance rates, updated April 2025
Let’s say your annual profit is £40,000. You’d pay 6% on the portion between £12,570 and £40,000, which is £27,430. That’s £1,645.80 in Class 4 NICs. If your profits hit £60,000, you’d pay 6% on £37,700 (£12,570 to £50,270), which is £2,262, plus 2% on £9,730 (£50,270 to £60,000), which is £194.60, for a total of £2,456.60. The HMRC Self-employed ready reckoner tool on GOV.UK can help you estimate this without breaking a sweat.
Voluntary Class 2 NICs: Should You Pay Them?
Here’s where it gets interesting. If your profits are below £6,725 (the Small Profits Threshold for 2024-2025, unchanged for 2025-2026), you won’t owe any NICs automatically. But hold on—paying voluntary Class 2 NICs at £3.45 per week (£179.40 for the year) could be a smart move. Why? Because it counts toward your State Pension eligibility. You need 35 qualifying years for the full State Pension, and skipping contributions could leave gaps in your record.
Imagine you’re a freelance graphic designer named Elowen from Cornwall, earning £5,000 a year. You’re not required to pay NICs, but by voluntarily paying £179.40 annually, you secure a qualifying year toward your pension. That’s a small price for peace of mind decades down the line. Check your State Pension forecast on GOV.UK to see if this applies to you.
Who’s Exempt from NICs?
Not everyone has to pay NICs. If you’re self-employed but fall into these categories, you might be off the hook:
Examiners, moderators, or invigilators for exams.
Ministers of religion without a salary or stipend.
Investors who make money without charging fees or commissions.
Landlords renting out property (unless it’s your main business).
If you’re unsure, HMRC’s employment status tool on GOV.UK can clarify whether you’re truly self-employed for tax purposes. I’ve seen cases where people thought they were self-employed but were actually “disguised employees” under IR35 rules, which changes everything. Always double-check.
Key Dates and Payment Deadlines
Be careful! Missing deadlines can land you in hot water with HMRC. For the 2025-2026 tax year, your Self Assessment tax return, which includes your NI contributions, is due by 31 January 2027 if filed online. Paper returns are due earlier, by 31 October 2026. You’ll also need to make Payments on Account if your tax and Class 4 NI bill exceeds £1,000, with payments due on 31 January and 31 July. These are advance payments toward your next year’s tax, based on the previous year’s liability.
For example, if your 2025-2026 tax and NI bill is £5,000, you might pay £2,500 on 31 January 2027 (for 2025-2026) plus £2,500 as a Payment on Account for 2026-2027. Miss these, and you’ll face penalties starting at 3% of the tax owed for a 15-day delay, rising to 10% after 31 days, plus interest.
Why This Matters for Your Business
Now, consider this: If you’re a sole trader or in a partnership, your NI contributions directly affect your cash flow. The 6% Class 4 rate on profits up to £50,270 is lower than the 8% employees pay on similar earnings, which is a win for self-employed folks. But the flip side? You don’t get the same automatic deductions, so budgeting is key. Set aside at least 20-25% of your profits monthly for tax and NI to avoid a January panic.
Take Idris, a self-employed plumber in Cardiff with £45,000 in profits. He sets aside £900 a month into a separate savings account. By January, he’s got £10,800 ready for his tax and NI bill, covering his £2,070 Class 4 NICs and roughly £6,286 in income tax (after the £12,570 Personal Allowance). This habit keeps him stress-free and penalty-free.
Step-by-Step Guide to Calculating Your NI
Here’s a simple guide to work out your Class 4 NICs for 2025-2026:
Calculate your annual profit: Total income minus allowable expenses. Use accounting software or HMRC’s Self Assessment forms.
Check the Lower Profits Limit: If your profit is below £12,570, you owe £0 in Class 4 NICs.
Apply the 6% rate: For profits between £12,570 and £50,270, multiply the difference by 6%.
Add the 2% rate: For profits above £50,270, multiply the excess by 2%.
Consider voluntary Class 2 NICs: If profits are below £6,725, decide if paying £179.40 annually for pension credits is worth it.
Set aside funds: Budget monthly to cover your NI and tax bill by January 31, 2027.
Use HMRC’s online calculator on GOV.UK for a precise estimate, or consult an accountant for complex cases, like partnerships or IR35 scenarios.
UK Class 4 National Insurance Calculator (2025-2026)
Practical Strategies to Manage Your Self-Employed National Insurance in 2025-2026
Right, so you’ve got a handle on how much National Insurance (NI) you’ll owe as a self-employed person in the 2025-2026 tax year. But knowing the numbers is only half the battle. Now, let’s get into the nitty-gritty of managing those contributions, keeping your records in order, and making sure you’re not overpaying or caught off guard by HMRC. This part is all about practical, actionable steps to keep your NI obligations under control, with a focus on real-world scenarios and the latest rules, including the upcoming Making Tax Digital (MTD) requirements. Let’s dive in with some strategies that’ll save you time, money, and stress.
Budgeting for Your NI Contributions
Let’s be honest—nobody likes a surprise tax bill. If you’re self-employed, budgeting for Class 4 NICs is crucial because they’re paid annually (or in Payments on Account) rather than monthly like PAYE for employees. The trick? Set aside a percentage of your income every month. For most self-employed folks with profits between £12,570 and £50,270, budgeting 20-25% of your profits covers both income tax and the 6% Class 4 NICs.
Take Morwenna, a freelance copywriter in Bristol earning £35,000 a year. Her Class 4 NICs come to £1,336.20 (6% of £22,430, the profit between £12,570 and £35,000). Her income tax, after the £12,570 Personal Allowance, is £4,486 on £22,430 at 20%. That’s a total tax and NI bill of £5,822.20. By setting aside £700 a month (£8,400 a year), she’s got enough to cover her bill and a bit extra for unexpected expenses. Use a separate savings account—banks like Starling or Monzo offer “pots” or sub-accounts to make this painless.
Here’s a quick budgeting table for different profit levels:
Annual Profit | Estimated Class 4 NICs | Estimated Income Tax | Total Tax & NI | Monthly Savings (25%) |
£20,000 | £442.80 | £1,486 | £1,928.80 | £400 |
£40,000 | £1,645.80 | £5,486 | £7,131.80 | £1,485 |
£60,000 | £2,456.60 | £11,486 | £13,942.60 | £2,905 |
Source: Calculated using HMRC rates for 2025-2026, verified via GOV.UK
Making Tax Digital: What You Need to Know
Now, here’s a heads-up: Starting 6 April 2026, Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) kicks in for self-employed people with income above £50,000 (and from April 2027 for those above £30,000). This means you’ll need to submit quarterly updates to HMRC using MTD-compatible software, like QuickBooks, Xero, or FreeAgent, instead of just one annual tax return. Your Class 4 NICs will still be calculated annually, but these updates include your income and expenses, which feed into your final NI and tax bill.
So, what does this mean for you? Get your bookkeeping in order now. If you’re still using spreadsheets or a shoebox of receipts, it’s time to upgrade. MTD requires digital records, and software can automate your NI calculations. For example, Xero’s dashboard shows your estimated tax and NI liability in real time, helping you avoid underestimating your bill. HMRC’s MTD guidance on GOV.UK is your go-to for compliance details.
Record-Keeping to Avoid NI Overpayments
Be careful! Sloppy records can lead to overpaying or underpaying NI, both of which cause headaches. Overpaying means you’re out of pocket until you claim a refund; underpaying can trigger penalties. Keep detailed records of:
Income: Invoices, bank statements, and payment receipts.
Expenses: Allowable business costs like travel, equipment, or home office expenses.
Profit calculations: Gross income minus allowable expenses equals your taxable profit.
For instance, Gwydion, a self-employed carpenter in Swansea, claimed £5,000 in expenses (tools, van mileage, and a home office) against his £30,000 income. His taxable profit dropped to £25,000, reducing his Class 4 NICs to £746.40 (6% of £12,430) instead of £1,036.20 without expenses. Check HMRC’s list of allowable expenses on GOV.UK to see what you can claim—things like professional subscriptions or marketing costs often get overlooked.
Use apps like Receipt Bank or Dext to scan and store receipts digitally. They sync with accounting software, making MTD compliance easier. And don’t forget to reconcile your accounts monthly to spot discrepancies early.
Voluntary Contributions for Low Earners
Now, consider this: If your profits are below £6,725, you’re not required to pay NICs, but you might want to. Why? Because voluntary Class 2 NICs (£179.40 for the year) count toward your State Pension and other benefits. Let’s look at Tamsin, a part-time Etsy seller in York earning £4,000 annually. By paying voluntary Class 2 NICs, she secures a qualifying year toward her pension, which could be worth £11,502 a year in retirement (based on the 2025-2026 full State Pension rate).
Not sure if it’s worth it? Log into your National Insurance record on GOV.UK to check your qualifying years. If you’re close to the 35 needed for the full pension, paying voluntarily is a no-brainer. But if you’re young and have decades to build up years, you might skip it—talk to an accountant to weigh the pros and cons.
Avoiding Common NI Pitfalls
None of us is a tax expert, but avoiding these mistakes can save you a fortune:
Missing Payments on Account: If your tax and NI bill exceeds £1,000, HMRC expects two payments (January and July). Missing them racks up interest at 3.25% above the Bank of England base rate (4.75% as of April 2025).
Misreporting profits: Mixing personal and business expenses can inflate your taxable profit. Use a separate business bank account to keep things clean.
Ignoring NI credits: If you’re on certain benefits (e.g., Carer’s Allowance), you might get NI credits automatically, reducing the need for voluntary payments.
A real-life example: In 2024, Bronwen, a freelance illustrator in Manchester, miscalculated her profits by including non-business income, overpaying £300 in Class 4 NICs. She spotted the error during a tax review, applied for a refund via HMRC’s online portal, and got her money back within 10 weeks. Always double-check your figures before submitting your Self Assessment.
UK Self-Employed National Insurance Statistics
Integrating National Insurance into Your Broader Tax Planning for 2025-2026
So, you’ve got the lowdown on how much National Insurance (NI) you’ll pay as a self-employed person in 2025-2026 and some practical tips for managing it. But NI doesn’t exist in a vacuum—it’s just one piece of your overall tax puzzle. In this part, we’ll explore how to weave NI into your broader tax planning, optimize deductions, and handle tricky situations like transitioning from employment to self-employment or dealing with partnerships. We’ll use real-world examples and the latest HMRC rules (verified as of April 2025) to make sure you’re not just compliant but also making the most of your money.
Aligning NI with Income Tax Planning
Let’s face it, tax planning can feel like juggling flaming torches while riding a unicycle. But aligning your NI and income tax strategies can save you a bundle. Since Class 4 NICs and income tax are both calculated on your taxable profit and paid through your Self Assessment, it makes sense to tackle them together. The Personal Allowance for 2025-2026 is £12,570, meaning you pay no income tax or Class 4 NICs on profits up to this amount. Above that, you’re hit with 20% income tax and 6% Class 4 NICs up to £50,270, then 40% tax and 2% NICs beyond.
Here’s a pro tip: Maximize your allowable expenses to lower your taxable profit. For example, Lowri, a self-employed hairdresser in Newport, earns £50,000 but claims £10,000 in expenses (salon supplies, rent, and training courses). Her taxable profit drops to £40,000, saving her £2,000 in income tax (20% of £10,000) and £600 in Class 4 NICs (6% of £10,000). Check HMRC’s allowable expenses guide on GOV.UK for ideas—things like professional development or even a portion of your broadband bill might qualify.
Transitioning from Employment to Self-Employment
Now, if you’ve recently ditched the 9-to-5 for self-employment, NI can be a bit of a shock. Employees pay Class 1 NICs automatically through PAYE, but as a self-employed person, you’re on the hook for Class 4 (and possibly voluntary Class 2). The transition can mess with your NI record, especially if you switch mid-tax year. Let’s look at Rhodri, a former office manager in Wrexham who went freelance as an IT consultant in October 2025. His employed income from April to September was £20,000, with Class 1 NICs deducted. His freelance profit from October to March is £15,000.
Here’s the catch: Rhodri’s total income (£35,000) is assessed for income tax, but his Class 4 NICs are only on his £15,000 profit, which is £136.80 (6% of £2,430, the profit above £12,570). However, he needs to ensure his NI contributions cover a full qualifying year for his State Pension. Since his Class 1 contributions stopped mid-year, he might need to pay voluntary Class 2 NICs (£179.40) to plug the gap. Use the NI record checker on GOV.UK to avoid surprises like this.
Partnerships and NI: What’s Different?
If you’re in a partnership, things get a tad more complex. Each partner pays Class 4 NICs on their individual share of the partnership’s profits, not the total business profit. For example, siblings Aneurin and Sioned run a bakery in Aberystwyth with £80,000 in annual profit, split equally. Each has a taxable profit of £40,000, paying £1,645.80 in Class 4 NICs (6% of £27,430) plus income tax. Partnerships must file a Partnership Tax Return (SA800) alongside individual Self Assessments, and HMRC’s partnership guidance on GOV.UK is crystal clear on this.
Watch out for profit-sharing agreements. If Aneurin takes 60% (£48,000) and Sioned 40% (£32,000), their NI bills differ: Aneurin pays £2,116.20, while Sioned pays £1,166.40. Clear agreements and accurate records are vital to avoid disputes or HMRC audits. Software like Sage can streamline partnership accounting, ensuring each partner’s NI is calculated correctly.
Optimizing Deductions to Lower NI
Now, consider this: Every allowable expense you claim reduces your taxable profit, which cuts both your income tax and Class 4 NICs. Beyond the usual suspects (office supplies, travel), think creatively. For instance:
Home office costs: If you work from home, claim a proportion of your rent, utilities, or council tax. HMRC’s simplified expenses (e.g., £26/month for 51+ hours of home working) can make this easier.
Training and subscriptions: Courses to maintain or improve your skills, or trade body memberships, are often deductible.
Pension contributions: These reduce your taxable income (though not directly your NI) and boost your retirement savings.
Take Cerys, a self-employed photographer in Cardiff. She claims £8,000 in expenses (camera gear, studio rent, and a photography course), dropping her £45,000 profit to £37,000. This saves her £1,600 in income tax and £480 in Class 4 NICs. HMRC’s simplified expenses calculator on GOV.UK can help you decide between actual costs and flat rates.
Here’s a table summarising common deductions:
Expense Type | Examples | Estimated Annual Saving (at 6% NI + 20% Tax) |
Home Office | £26/month flat rate | £312 (£187.20 tax, £124.80 NI) |
Travel | Mileage at 45p/mile (first 10,000) | £1,350 (3,000 miles) |
Training | £1,000 course | £260 (£200 tax, £60 NI) |
Source: HMRC allowable expenses, verified April 2025
Handling IR35 and NI
Be careful! If you work through your own limited company or as a contractor, IR35 rules might classify you as a “deemed employee,” meaning you pay Class 1 NICs instead of Class 4. This happened to Dafydd, a freelance software developer in London, whose client deemed him inside IR35 in 2024. His NI jumped from 6% to 12% on earnings up to £50,270, costing him an extra £2,262 annually. Use HMRC’s Check Employment Status for Tax (CEST) tool on GOV.UK to clarify your status, and consider consulting an accountant if you’re on the fence.
Planning for Payments on Account
So, the question is: How do you avoid a cash flow crunch with Payments on Account? These are HMRC’s way of collecting tax and NI in advance, due on 31 January and 31 July. If your 2025-2026 bill is £10,000, you might pay £5,000 in January 2027 (for 2025-2026) and £2,500 in July 2027 (for 2026-2027). If your income drops, you can apply to reduce these payments via HMRC’s online portal. In 2023, Eluned, a self-employed tutor in Bangor, overestimated her 2024-2025 income and overpaid £1,500. She applied for a reduction, saving her cash flow until her refund came through.
Real-Life Scenario: Mixed Income Challenges
Let’s wrap this part with a case study. In 2024, Branwen, a part-time barista and freelance graphic designer in Leeds, earned £15,000 from her café job (with Class 1 NICs deducted) and £10,000 from freelancing. Her freelance profit is below the £12,570 Lower Profits Limit, so she owes no Class 4 NICs. But her combined income pushes her into the 20% tax bracket, and she needs to file a Self Assessment for her freelance work. By claiming £2,000 in expenses (software, marketing), her taxable profit drops to £8,000, saving her £400 in tax. She checks her NI record on GOV.UK and pays voluntary Class 2 NICs (£179.40) to secure her pension year.
Summary of All the Most Important Points
Self-employed individuals in the UK for 2025-2026 pay Class 4 National Insurance Contributions (NICs) at 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270, with no mandatory Class 2 NICs following their abolition in April 2024.
Profits below £6,725 exempt you from NICs, but paying voluntary Class 2 NICs (£179.40 annually) can secure a qualifying year for your State Pension.
Budgeting 20-25% of your profits monthly into a separate savings account helps cover your NI and income tax, avoiding surprises by the January 31, 2027, Self Assessment deadline.
Making Tax Digital (MTD) for Income Tax Self Assessment, mandatory from April 2026 for those with income above £50,000, requires quarterly digital updates using compatible software like Xero or QuickBooks.
Accurate record-keeping of income and expenses, using tools like Receipt Bank, prevents overpaying or underpaying NICs and ensures MTD compliance.
Claiming allowable expenses, such as home office costs or training, reduces taxable profit, lowering both Class 4 NICs and income tax.
Transitioning from employment to self-employment mid-year requires checking your NI record on GOV.UK to ensure a full qualifying year for benefits like the State Pension.
Partnerships calculate Class 4 NICs on each partner’s profit share, requiring a Partnership Tax Return and clear profit-sharing agreements to avoid disputes.
IR35 rules may classify contractors as “deemed employees,” increasing NI to Class 1 rates (12% up to £50,270), so use HMRC’s CEST tool to confirm status.
Payments on Account, due January and July, can be reduced if your income drops, preventing cash flow issues, with applications available via HMRC’s online portal.
FAQs
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The Author:
Adil Akhtar, ACMA, CGMA, CEO and Chief Accountant of Pro Tax Accountant, is an esteemed tax blog writer with over 10 years of expertise in navigating complex tax matters. For more than three years, his insightful blogs have empowered UK taxpayers with clear, actionable advice. Leading Advantax Accountants as well, Adil blends technical prowess with a passion for demystifying finance, cementing his reputation as a trusted authority in tax education.
Email: adilacma@icloud.com
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