National Insurance for the self-employed
If you are self-employed you will normally pay class 2 National Insurance and class 4 National Insurance.
Class 2 National Insurance
Once you start self employment you become liable to pay Class 2 National Insurance.
Most people will pay class 2 National Insurance along with class 4 National Insurance and income tax (in January self-assessment payments). People with profits of less than the Small Profit Threshold will not have to pay any class 2 National Insurance. They will not need to claim an exemption in advance.
For 2022/23 the threshold is £11,908. The threshold is being brought into line with the tax free personal allowance of £12,570 as from 6 July 2022. This calculation is based on 13 weeks x £9,880 and 39 weeks x £12,570.
In some cases, you may wish to voluntarily pay class 2 National Insurance. This can be done on the self-assessment tax return.
You may need to consider making a voluntary payment of class 2 National Insurance in advance, even where your profits are over the Small Profit Threshold. This is likely to apply if you want to claim Maternity Allowance before the usual self-assessment payment date for the tax year.
For 2022-23, class 2 National Insurance is due at £3.15 per week.
National Insurance is payable based on the level of your business profits. See the Gov.uk website for registering on-line at https://www.gov.uk/register-for-self-assessment#4 or contact the Newly self-employed helpline 0300 200 3504.
There are special rates of Class 2 National Insurance for share fishermen and volunteer development workers. For details see the Share Fishermen and Volunteer Development Workers pages on the HMRC website.
Do I have to pay Class 2 National Insurance?
Unless your profits from self-employment are below the threshold you will have to pay Class 2 National Insurance.
Even when you do not have to pay class 2 National Insurance, you may wish to pay Class 2 anyway in order to preserve your pension entitlement and entitlement to certain other State Benefits. If your profits are over the small earnings exception level / Small Profit Threshold, you must pay Class 2 National Insurance.
Class 4 National Insurance
If your taxable profits are above the lower Class 4 profit limit you will pay Class 4 contributions of 10.25% on profits over this limit. The limit in 2022/23 is £9,880 from 6 April 2022 to 5 July 2022 and £12,570 from 6 July 2022. You pay Class 4 National Insurance together with your income tax – usually due by 31 January and 31 July each tax year. If profits are high (over £50,270 in 2022-23) then the rate of Class 4 National Insurance falls to 3.25% on profits over this higher limit.