If you're a sole trader, National Insurance is the bit of your tax bill that catches people out. You know about income tax. You might not realise you also pay National Insurance contributions (NICs) on your profits, and that the rules changed in recent years so they don't always work the way older guides describe.
This guide covers how self employed National Insurance works for the 2026/27 tax year. We'll explain Class 2 and Class 4, the thresholds that matter, and what you actually pay. There's an illustrative worked example so you can sanity-check your own numbers.
It's written for sole traders and self-employed individuals in England, Wales and Northern Ireland, from tradespeople to online creators. If you earn from social platforms, our guide to National Insurance for TikTok creators in 2026/27 applies the same rules to that income. If you trade through a limited company, your NICs work differently and this guide isn't the right one for you.
New for 2026: HMRC has begun writing to hundreds of thousands of self-employed people whose earlier years may not be counting towards their State Pension. If a letter about Class 2 National Insurance has landed on your doormat, do not rush to pay it. We explain what it means, and the one step to take first, further down this guide.
What National Insurance do the self-employed pay?
As a sole trader, there are two types of National Insurance to know about: Class 2 and Class 4.
Class 4 is the one most people end up paying. It's a percentage of your taxable profits, much like income tax, and it's collected through Self Assessment.
Class 2 used to be a small flat weekly charge. It still exists, but for most self-employed people it now works very differently. We'll come to that.
Both are based on your profits, not your turnover. Profit means your business income after you've deducted allowable expenses. The figures below are for the 2026/27 tax year (6 April 2026 to 5 April 2027).
What is Class 4 National Insurance and how much is it?
Class 4 is charged on your annual taxable profits above a set threshold. For 2026/27 it's worked out in two bands.
| Profit band (2026/27) | Class 4 rate |
|---|---|
| Up to £12,570 | 0% (nothing to pay) |
| £12,570 to £50,270 | 6% |
| Over £50,270 | 2% |
The £12,570 figure is the Lower Profits Limit, and £50,270 is the Upper Profits Limit. You pay the main 6% rate on the slice of profit between those two figures, then a reduced 2% on anything above the upper limit.
The rates and limits above are for 2026/27. (Source: gov.uk self-employed National Insurance rates.)
It works like income tax bands: the higher rate only applies to the part of your profit that falls in that band, not your whole profit.
What happened to Class 2 National Insurance?
This is where older guides go wrong. For years, the self-employed paid a flat weekly Class 2 charge on top of Class 4. That flat charge was removed from 6 April 2024.
Here's how it works now for 2026/27:
- If your profits are at or above the Small Profits Threshold of £7,105, Class 2 is treated as paid. You don't hand over any money, but your National Insurance record is maintained as if you had. (Source: gov.uk self-employed National Insurance rates.)
- If your profits are below £7,105, you have no obligation to pay Class 2 at all. You can choose to pay it voluntarily, at £3.65 a week for 2026/27, to keep your record going.
Why does the record matter? Class 2 (whether actually paid or treated as paid) is what builds your entitlement to the State Pension and certain other contributory benefits. So even though most people no longer pay it, it's quietly doing an important job in the background.
What are the National Insurance thresholds for 2026/27?
It helps to see all the self-employed thresholds in one place. These are the figures that decide what you pay and what you protect.
| Threshold (2026/27) | Amount | What it does |
|---|---|---|
| Small Profits Threshold (SPT) | £7,105 | At or above this, Class 2 is treated as paid (record protected, nothing to pay). |
| Class 4 Lower Profits Limit (LPL) | £12,570 | Class 4 starts above this. |
| Class 4 Upper Profits Limit (UPL) | £50,270 | Above this, the Class 4 rate drops to 2%. |
Sources: gov.uk self-employed National Insurance rates.
Notice the gap between the SPT (£7,105) and the LPL (£12,570). If your profits land in that range, you pay no Class 4 and no Class 2, yet your year still counts towards your State Pension. That's a genuinely useful position to be in.
How do I work out my National Insurance? An illustrative example
Illustrative example. Meet Sam, a self-employed graphic designer trading as a sole trader in Manchester. We'll run two profit levels so you can see how the bands behave. These are made-up figures to show the method.
Sam's profit is £40,000 for 2026/27
Only Class 4 applies (profits are above the SPT, so Class 2 is treated as paid and costs nothing).
- Profit above the Lower Profits Limit: £40,000 - £12,570 = £27,430
- Class 4 at 6%: £27,430 x 6% = £1,645.80
Sam's Class 4 bill is £1,645.80. There's no separate Class 2 to add.
Now say Sam's profit is £60,000 for 2026/27
This crosses the Upper Profits Limit, so two Class 4 rates apply.
- Profit in the 6% band: £50,270 - £12,570 = £37,700, at 6% = £2,262.00
- Profit above the Upper Profits Limit: £60,000 - £50,270 = £9,730, at 2% = £194.60
- Total Class 4: £2,262.00 + £194.60 = £2,456.60
Notice that pushing profits past £50,270 doesn't make the whole lot more expensive. Only the slice above the upper limit moves to the lower 2% rate. The maths can get fiddly once you add income tax on top, so our self-employed tax calculator and National Insurance calculator will do the heavy lifting for you.
Should I pay voluntary Class 2 if my profits are low?
If your profits are below the Small Profits Threshold of £7,105 for 2026/27, you have a decision to make.
You don't have to pay anything. But that means the year may not count towards your State Pension, which could affect what you eventually receive. Paying voluntary Class 2 at £3.65 a week fills the gap cheaply compared with the other classes of voluntary contributions.
Whether it's worth it depends on your wider National Insurance record. If you already have, or expect to reach, the 35 qualifying years needed for the full new State Pension through employment or other years, paying more may add nothing. If you have gaps, it can be one of the most cost-effective ways to plug them. If you're approaching retirement, it's also worth knowing how National Insurance changes once you reach State Pension age.
This is a judgement call worth getting right, because once a year has passed the window to pay can close. It's exactly the sort of thing we'd check when we handle your Self Assessment return. For a deeper look at your obligations as a sole trader, see our guidance for sole traders.
Has HMRC written to you about a Class 2 National Insurance gap?
In July 2026 HMRC began writing to self-employed people whose past years may not count towards the State Pension. The letter (reference LCL2REG2MM) goes to anyone who declared self-employed or partnership income on a tax return for any year from 2015/16 up to 2023/24 but did not register to pay Class 2 National Insurance. (Source: gov.uk, check an HMRC letter is genuine.)
It is a genuine letter, not a scam. It is also a separate exercise from the older Home Responsibilities Protection correction aimed mainly at parents who claimed Child Benefit, which is easily confused with it. Professional bodies estimate around 800,000 people are affected, with roughly 160,000 already at or within two years of State Pension age. Those closest to retirement are being contacted first.
Why did the gap happen? Usually because the year reached HMRC for tax but was never linked to the National Insurance system. Common causes: you already held a UTR for another reason, so no separate CWF1 self-employment registration was filed; a voluntary Class 2 payment landed after the 31 January deadline; or a payment was set against an outstanding tax bill instead of your NICs.
Do not rush to pay. The letter tells you to contact the Department for Work and Pensions (DWP) before you decide whether to pay Class 2 for those years. DWP will tell you what paying would actually do to your State Pension, because it does not always increase it, for example if you will reach 35 qualifying years anyway, or if a higher pension would reduce a means-tested benefit. That single instruction is the most important line in the letter, and the one most easily missed. (Source: gov.uk.)
Because these are correction cases, HMRC will let you fill the affected years even though some fall outside the normal six-year window for voluntary contributions. You do not need to wait for a letter to check your own position, which is what the next section covers.
How do I check my National Insurance record and fill gaps?
Check your National Insurance record and State Pension forecast free on gov.uk or in the HMRC app. You need 35 qualifying years for the full new State Pension, which is £241.30 a week in 2026/27, and at least 10 qualifying years to get any new State Pension at all. The forecast shows any gaps and whether you can pay to fill them. (Source: gov.uk check your State Pension.)
If you do have gaps worth filling, there are two voluntary classes, and which one applies depends on why the year is short.
| Voluntary NIC (2026/27) | Weekly cost | A full missing year | Who it is for |
|---|---|---|---|
| Class 2 | £3.65 | about £189.80 | Self-employed with profits below the £7,105 Small Profits Threshold, protecting a self-employed year. |
| Class 3 | £18.40 | about £956.80 | Employed, not working, or otherwise not able to use Class 2, filling a general gap. |
Sources: gov.uk voluntary National Insurance rates.
Class 2 is roughly a fifth of the cost of Class 3, which is why a self-employed year is one of the cheapest to protect. You can normally only pay voluntary contributions for the past six years, and each year's window closes on 5 April, so a 2020/21 gap has to be paid by 5 April 2027. (Source: gov.uk deadlines.) The HMRC letters above are the exception that reaches further back.
One rule always applies: work out what a year actually buys before you pay. A full extra year is worth roughly £6.89 a week of pension in today's terms (the full £241.30 shared across 35 years), but only if you are below 35 years and will not get there through future work anyway. This is exactly the sort of check we run when we handle your Self Assessment return, and it is worth reading our plain-English guide to how National Insurance works alongside this.
How and when do I pay self-employed National Insurance?
You don't pay Class 4 (or voluntary Class 2) separately. Both go through your Self Assessment tax return, alongside your income tax. HMRC works out the National Insurance from the profit figures you report.
The dates that matter:
- Register for Self Assessment by 5 October following the end of the tax year, if you're new to it. (Source: gov.uk Self Assessment deadlines.)
- File online and pay by midnight on 31 January following the tax year. (Source: gov.uk Self Assessment deadlines.)
So for the 2026/27 tax year, the online filing and payment deadline is 31 January 2028. If you make payments on account, your National Insurance forms part of that calculation too.
Want this sorted without the guesswork? Book a free call (about 20 minutes) with a Zmartly accountant and we'll handle your Self Assessment, work out your Class 2 and Class 4 National Insurance, and make sure you're not overpaying or leaving gaps in your record. Talk to a Zmartly accountant.
Frequently asked questions
Do self-employed people still pay Class 2 National Insurance?
For most, no. The flat weekly Class 2 charge was removed from 6 April 2024. If your profits are at or above the Small Profits Threshold of £7,105 for 2026/27, Class 2 is treated as paid, so your National Insurance record is protected without you handing over any money. Only those with profits below £7,105 might choose to pay it voluntarily.
How much is Class 4 National Insurance in 2026/27?
For 2026/27, Class 4 is 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. There's nothing to pay on profits up to £12,570.
What is the Small Profits Threshold for 2026/27?
The Small Profits Threshold for 2026/27 is £7,105. If your profits reach this level, your Class 2 National Insurance is treated as paid, which keeps your year counting towards the State Pension at no cost to you.
Why would I pay voluntary National Insurance if I don't have to?
If your profits are below £7,105, the year may not count towards your State Pension. Paying voluntary Class 2 at £3.65 a week for 2026/27 can preserve that qualifying year. It's worth checking your National Insurance record first, because it only helps if you actually have gaps to fill.
Do I pay National Insurance and income tax on the same profits?
Yes. Income tax and Class 4 National Insurance are both charged on your taxable profits, and both are collected through Self Assessment. They use different thresholds and rates, so it's normal to owe both on the same income.
When do I pay self-employed National Insurance for 2026/27?
It's paid through Self Assessment. The online filing and payment deadline for the 2026/27 tax year is 31 January 2028. If you're new to Self Assessment, register by 5 October 2027.
I've had an HMRC letter about Class 2 National Insurance, is it genuine?
Yes. Letters about Class 2 National Insurance and your State Pension (reference LCL2REG2MM) are a genuine 2026 HMRC exercise. They go to self-employed and partnership taxpayers who reported income for years from 2015/16 to 2023/24 but were not registered to pay Class 2. You can confirm any HMRC letter against the gov.uk list of genuine HMRC contact.
Should I pay the Class 2 contributions the HMRC letter mentions?
Not automatically. HMRC's letter asks you to contact the DWP first, because paying only helps if the year adds a qualifying year you actually need. If you will reach 35 qualifying years through other work, or a higher pension would cut a means-tested benefit, paying may add nothing. Check the effect before you pay.
How much is voluntary Class 3 National Insurance in 2026/27?
Voluntary Class 3 is £18.40 a week for 2026/27, so a full missing year costs about £956.80. Class 3 is for people who cannot use the cheaper Class 2, such as employees or those not working. Self-employed people with low profits can usually use Class 2 at £3.65 a week instead.
