Class 2 and Class 4 NI on profits.
Total National Insurance
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Class 4 (6% band)
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Class 4 (2% band)
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Class 4 is not the same as employee NI
Plenty of people assume the self-employed pay the same National Insurance as employees. They do not, and the gap matters. An employee pays Class 1 at 8% on earnings between the primary threshold and the upper earnings limit. A sole trader pays Class 4, charged at 6% on profit between £12,570 and £50,270, then 2% above. That two-percentage-point difference exists because the self-employed historically received fewer contributory benefits. This calculator works out Class 4 on the profit you enter and tells you where Class 2 stands.
Class 2, and the trap below the threshold
Class 2 used to be a flat weekly stamp. From April 2024 it became free for most: if your profit clears the small profits threshold of £6,725, you are treated as having paid Class 2 with no cash leaving your account, and your year still counts toward the state pension. The genuine catch is at the bottom. If your profit falls below £6,725, you pay no compulsory NI at all, but you also build no qualifying year. Self-employed people in a lean year should check their National Insurance record, because a single missing year can dent the new state pension, and topping up voluntarily later costs far more than a Class 2 stamp would have.
Worked example on £60,000 profit
Enter £60,000 of profit. The 6% main band runs across the £37,700 between £12,570 and £50,270, giving £2,262. Profit above £50,270 is £9,730, taxed at 2%, which adds £195. Total Class 4 is £2,457. Class 2 is treated as paid, so nothing more.
| Band | Profit in band | Rate | NI |
|---|---|---|---|
| £12,570 to £50,270 | £37,700 | 6% | £2,262 |
| Above £50,270 | £9,730 | 2% | £195 |
| Total Class 4 NI | £2,457 | ||
Notice how little the 2% band contributes even on a healthy profit. That flat 2% with no upper ceiling means very high earners pay proportionally less NI than someone in the heart of the 6% band, one reason NI is sometimes called regressive at the top.
Who this is for, and a common mistake
This page is for sole traders and partners in a partnership. If you run a limited company and pay yourself a salary, you are an employee of your own company and pay Class 1, not Class 4, so this is the wrong tool. The frequent error among new freelancers is forgetting that NI rides on top of income tax. Profit of £60,000 carries both the Class 4 here and income tax through Self Assessment, so set aside for both. A reasonable rule of thumb is to park 25% to 30% of profit in a separate account from day one.
Can I pay Class 2 voluntarily if my profit is low?
Yes. If profit is under £6,725 you can choose to pay Class 2 voluntarily, currently a few pounds a week, to keep that tax year qualifying for the state pension and certain benefits. It is usually far cheaper than buying the year back later as a Class 3 top-up, so it is worth doing in a quiet year.
Is Class 4 NI deductible against income tax?
No. Class 4 National Insurance is not an allowable deduction for income tax, and income tax is not deductible against NI either. They are calculated on the same profit but charged side by side, which is exactly why your total Self Assessment bill is larger than the income tax figure alone. The one thing that does reduce both is a personal pension contribution, since paying into a pension lowers your taxable profit and therefore the income tax, even though the NI saving works differently. If you are weighing whether to incorporate, the combined income tax plus Class 4 figure is the right number to compare against a salary-plus-dividends route through a limited company.