National Insurance On Self-Employed: What Every Sole Trader Needs to Know (Tax Year 2025/26)
If you’re self-employed, understanding your obligations around National Insurance on self-employed income is essential. From 6 April 2025 the rules for how much you pay – and how you build your entitlement to state benefits – have changed significantly. This guide gives you the clear, updated picture for the 2025/26 tax year.
1. What is National Insurance On Self-Employed?
The term National Insurance on self-employed refers to the contributions that individuals who run their own business (sole traders, partners) pay or are treated as having paid so they can build their state pension and contributory benefits.
Previously there were two mandatory classes for self-employed people: Class 2 and Class 4.
From 6 April 2024 mandatory Class 2 contributions were abolished for most self-employed individuals.
So when we look at National Insurance on self-employed for 2025/26 we need to focus on how Class 2 (voluntary) and Class 4 (profit-based) contributions apply.
2. Key thresholds for National Insurance On Self-Employed for 2025/26
| Type | Threshold / Rate |
|---|---|
| Small Profits Threshold (SPT) | £6,845 for 2025/26 |
| Lower Profits Limit (LPL) – when Class 4 starts | £12,570 for 2025/26 |
| Upper Profits Limit (UPL) – higher rate threshold | £50,270 for 2025/26 |
| Class 2 rate (voluntary) | £3.50 per week for 2025/26 |
| Class 4 contributions | 6% on profits between £12,570 and £50,270; 2% on profits above £50,270 for 2025/26 |
3. How National Insurance On Self-Employed works in practice
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If your profits are less than the Small Profits Threshold (£6,845): You will not be required to pay any mandatory Class 2 or Class 4 contributions. However, you can choose to pay voluntary Class 2 contributions at £3.50 per week to keep your National Insurance record up to date.
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If your profits are between the Small Profits Threshold (£6,845) and the Lower Profits Limit (£12,570): You will not pay Class 4 contributions, and you are treated as having paid Class 2 contributions for the purpose of benefits entitlement. This means your National Insurance on self-employed record is protected without you making a payment.
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If your profits are between £12,570 and £50,270: You will pay Class 4 contributions at 6% on the amount that falls within that band. The National Insurance on self-employed valid contribution is the Class 4 charge.
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If your profits exceed £50,270: You will pay 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. Again this is part of the National Insurance on self-employed obligation.
4. Why National Insurance On Self-Employed matters
Your contributions – or treated contributions – count towards the number of qualifying years you need for the state pension and for contributory benefits such as New-style ESA, Maternity Allowance and Bereavement Support Payment. If you don’t meet the required number of years, you risk a reduced pension or loss of benefit entitlement.
Even though Class 2 payments are now largely optional for many self-employed, if you are under the threshold you may choose to pay voluntarily to avoid gaps.
5. Recent changes for National Insurance On Self-Employed and what to watch
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From 6 April 2024 mandatory Class 2 contributions were abolished for those whose profits exceed the small profits threshold.
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For the 2025/26 year the rates and thresholds remain as above: 6% and 2% for Class 4, with voluntary Class 2 at £3.50.
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It’s important to check each year for changes: thresholds may be updated in the Chancellor’s budget or Autumn Statement.
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There has been speculation about further changes to National Insurance on self-employed structures, for example proposals to extend employer-type NICs to partners in LLPs or other self-employed arrangements.
6. Practical tips for self-employed to manage National Insurance On Self-Employed
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Monitor your profits carefully so that you know what band of National Insurance on self-employed you fall into when you submit your Self Assessment.
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If you expect your profits to be below the Lower Profits Limit, check whether voluntary Class 2 contributions make sense to avoid gaps in your entitlement.
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Set aside enough money to meet your Class 4 contributions and income tax — missing payments may lead to interest or penalties.
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Keep accurate records of your self-employed profits, allowable expenses and ensure your Self Assessment is filed by 31 January each year to ensure your National Insurance on self-employed contributions are correctly captured.
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If you have multiple sources of self-employment (or are in a partnership), make sure you combine profits for the purposes of National Insurance on self-employed.
7. How Trueman Brown Chartered Accountants can help you
If you’re a sole trader or partner trying to navigate National Insurance on self-employed obligations for 2025/26, Trueman Brown can provide tailored advice and support.
Whether you want to optimise your tax and National Insurance position, ensure you’ve built sufficient qualifying years, or simply stay compliant and avoid surprises—we are here to help.
Get in touch via mark@truemanbrown.co.uk or call 01708 397262 for a consultation and guidance on your self-employed National Insurance position.
FAQ
Q1: Do I have to pay Class 2 contributions now I’m self-employed?
A: If your profits exceed the small profits threshold (£6,845 for 2025/26), you will not have to pay mandatory Class 2 contributions. You’ll be treated as having paid them for your National Insurance record. However, if your profits are below that threshold, you may choose to make voluntary Class 2 payments at £3.50 per week to avoid gaps.
Q2: What is the National Insurance on self-employed rate for 2025/26?
A: For Class 4 contributions (which many self-employed will pay) the rate is 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270.
Q3: My profits are £11,000 this year — do I pay any National Insurance?
A: With profits of £11,000 (between £6,845 and £12,570), you will not pay Class 4 contributions. You will be treated as having paid Class 2 contributions for the purpose of your NI record. So National Insurance on self-employed obligations will be satisfied without payment.
Q4: Are Class 4 contributions part of my National Insurance record for benefits?
A: While you pay Class 4 contributions, these do not themselves count towards your benefits record (e.g., state pension). The key is the fact that you are treated as having paid Class 2 (or you actually pay voluntary Class 2) so that your qualifying years are preserved.
Q5: What happens if I delay filing my Self Assessment and don’t pay National Insurance on self-employed on time?
A: Late filing or payment may result in interest and penalties from HM Revenue & Customs. Also, if you miss key deadlines your NI record may not be updated in time, which could affect your entitlement to benefits tied to your contribution record.
If you’d like to discuss your specific self-employment situation and how National Insurance on self-employed impacts you, feel free to reach out to Trueman Brown via mark@truemanbrown.co.uk or 01708 397262.
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