Understanding National Insurance Contributions for The Self-Employed
As a self-employed individual, you no doubt have a host of questions regarding your tax obligations. One common query is, “Do I need to pay National Insurance contributions as self-employed?” The simple answer is yes, you do. However, the amount you pay and how you pay it varies depending on your profits. In this post, we’ll delve into the specifics of National Insurance contributions for the self-employed, using the latest data from 2025 provided by the Her Majesty’s Revenue and Customs (HMRC).
What is National Insurance?
National Insurance is a tax system in the UK that funds state benefits, including the State Pension and unemployment benefits. When you’re self-employed, you’re responsible for paying this tax yourself.
Types of National Insurance Contributions
There are two types of National Insurance Contributions (NICs) that self-employed people may need to pay:
- Class 2 if your profits are £6,515 or more a year
- Class 4 if your profits are £9,569 or more a year
These thresholds are for the tax year 2025/26 as per the latest HMRC data.
How Much Do You Need to Pay?
The amount of National Insurance you pay is determined by your profits:
- Class 2 NICs: A flat rate of £3.05 a week for the tax year 2025/26.
- Class 4 NICs: 9% on profits between £9,569 and £50,270, and 2% on profits over £50,270 for the tax year 2025/26.
You can access all these details on the HMRC website.
How to Pay National Insurance Contributions?
You usually pay your National Insurance at the same time as your Income Tax. This is typically through the Self Assessment tax return system. The HMRC will calculate how much you owe based on the information you provide in your tax return.
Small Profits Threshold
If your profits are below the Small Profits Threshold (£6,515 for 2025/26), you won’t need to pay Class 2 NICs. However, you can choose to pay them voluntarily. This can help you protect your entitlement to certain benefits, including the State Pension.
National Insurance Credits
You might be eligible for National Insurance credits if you’re unable to work, for example, due to illness, parenting, or if you’re a carer. These credits can help you fill gaps in your National Insurance record, ensuring you qualify for certain benefits including the State Pension. More details can be found on the HMRC website.
Conclusion
To summarise, as a self-employed individual, you are generally required to pay National Insurance contributions. The specific amount will depend on your annual profits. By keeping up to date with your NICs, you can ensure you’re eligible for certain state benefits, including the State Pension.
