Class 4 National Insurance

Definition

Class 4 NI is paid by self-employed individuals on their annual trading profits. For 2026/27, you generally pay 6% on profits between the £12,570 lower profits limit and £50,270 upper profits limit, then 2% on profits above the upper limit. It is calculated through Self Assessment alongside Income Tax. Class 4 NI does not itself provide the same benefit-record function as Class 2 or voluntary contributions.

Why it matters

• It is a significant extra cost for self-employed people on top of Income Tax.
• The rate (6%) is lower than the employee Class 1 rate (8%), but self-employed people do not get employer contributions.

Common use cases

• Self Assessment tax calculation
• Comparing employed vs self-employed tax burden
• Profit and tax planning