Tax year: 2026/27 — 6 April 2026 to 5 April 2027. Reviewed 6 October 2026.
National Insurance for a sole trader is not calculated in the same way as deductions from an employee’s payslip. Understanding the difference helps you read your Self Assessment bill and avoid paying voluntary contributions without checking whether they will help.
Class 4: the charge on qualifying business profits
For 2026/27, Class 4 is 6% on profits above £12,570 up to £50,270, then 2% on profits above £50,270. These are marginal bands: moving into the higher band does not apply 2% to all your profits.
For example, qualifying profits of £60,000 produce £2,262 on the first taxable band, plus £194.60 on the remaining £9,730. Total Class 4 is £2,456.60, before any special adjustments. Income Tax is calculated separately.
Class 2: treated-as-paid and voluntary contributions
Where the ordinary rules apply, profits of £7,105 or more mean Class 2 is treated as paid without a payment being required. Below £7,105, voluntary Class 2 may be available at £3.65 a week. Particular occupations and circumstances have special rules.
These rules are about your National Insurance record as well as the cash bill. Class 4 payments themselves do not build State Pension entitlement in the same way.
Should you pay voluntarily in a low-profit year?
First check whether that year is already covered by employment or credits. Then check your State Pension forecast. Paying voluntary contributions does not always increase your pension, particularly where earlier contribution history or contracted-out periods affect entitlement.
If you are below State Pension age, the Future Pension Centre can help confirm whether filling a particular gap will improve your forecast. If you have reached State Pension age, contact the Pension Service. Do not rely on a universal “35 years means the full pension” rule.
What if you also have a job?
Your employer deals with Class 1 on employment earnings, while Class 4 is considered on self-employed profits. A person with both sources should review the combined position, including any relevant annual maximum rules. Having a job does not simply cancel National Insurance on a separate trade.
Records and payment planning
- Keep accurate business income and expense records.
- Retain employment information where you also receive a salary.
- Check contribution records and credits before voluntary payments.
- Separate the Income Tax and NI elements of your forecast.
- Include any payments on account in your cash budget.
See our Class 4 guide, Class 2 guide and payments on account explainer.
Digivolve can help review your business figures and tax return. Explore self-employed tax return support or book a consultation.
General guidance, not individual advice. Sources: HMRC self-employed NI rates and voluntary contributions guidance.
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