National Insurance for self-employed tradespeople in 2026
Quick answer: Self-employed people pay Class 4 NI at 6% on profits between £12,570 and £50,270, and 2% above £50,270 (2025/26 rates). Class 2 NI was abolished in April 2024 but you can still pay voluntarily (£3.45/week) to protect your state pension entitlement.
What changed in April 2024
The biggest shake-up to self-employed National Insurance in years happened in April 2024. Class 2 NI contributions were abolished. Previously, every self-employed person paid £3.45 per week in Class 2 NI, which bought them a qualifying year towards their state pension.
Quick takeaway: Class 2 NI has been abolished, but you can still pay voluntarily to safeguard your state pension.
At the same time, Class 4 NI rates were cut from 9% to 6% on the main band. This was the second cut in six months, following a reduction from 9% to 8% in January 2024.
For a tradesperson earning £40,000 profit, the combined effect saves around £650 a year compared to the 2023/24 rates. Not life-changing money, but not nothing either.
Current NI rates for 2025/26
Class | Who pays | Rate | Threshold |
|---|---|---|---|
Class 2 (voluntary) | Self-employed wanting pension credits | £3.45/week | Optional |
Class 4 (main rate) | Self-employed on profits | 6% | £12,570 - £50,270 |
Class 4 (upper rate) | Self-employed on higher profits | 2% | Above £50,270 |
Class 4 NI is calculated on your taxable profit after allowable expenses. It is collected through self-assessment, so you pay it in January and July along with your income tax.
How to calculate your NI bill
Take your taxable profit (turnover minus allowable expenses). Then:
Pro tip: Use our self-assessment calculator to simplify your tax and NI calculations and avoid penalties.
Ignore the first £12,570 (the lower profits threshold)
On profits from £12,570 to £50,270: multiply by 6%
On anything above £50,270: multiply by 2%
Example: A plumber with £45,000 taxable profit.
£12,570 to £45,000 = £32,430 at 6% = £1,945.80
Nothing above £50,270
Total Class 4 NI: £1,945.80
Example: An electrical contractor with £65,000 taxable profit.
£12,570 to £50,270 = £37,700 at 6% = £2,262
£50,270 to £65,000 = £14,730 at 2% = £294.60
Total Class 4 NI: £2,556.60
Use our self-assessment calculator to work out your combined income tax and NI liability.
The state pension question
Here is where abolishing Class 2 NI gets complicated. Class 2 contributions used to buy you qualifying years towards the state pension. You need 35 qualifying years for the full new state pension (currently £221.20 per week) and at least 10 years for any state pension at all.
Now that Class 2 is abolished, how do self-employed people build up pension entitlement?
Many UK tradespeople also find it helpful to review self assessment tax guide for tradespeople at this stage.
HMRC has introduced automatic credits. If your profits are above £12,570, you get a qualifying year automatically through Class 4 NI. No extra cost, no extra paperwork.
If your profits are between £6,725 and £12,570, you also get credits automatically (this used to happen through Class 2).
If your profits are below £6,725, you can still pay voluntary Class 2 NI at £3.45/week (£179.40/year) to get a qualifying year. This is almost always worth doing. Compare £179.40 to the annual value of a full state pension year: roughly £328 per year for life from state pension age. That is an extraordinary return.
NI and limited companies
If you operate through a limited company, different rules apply. As a company director, you pay:
If you are sorting this alongside other compliance work, read self-employed tax deadlines.
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Class 1 Employee NI: 8% on salary between £12,570 and £50,270, 2% above that
Class 1 Employer NI: The company pays 15% on salary above £5,000 (from April 2025)
This is why most contractor accountants advise paying yourself a salary of £12,570 (to get NI credits at zero NI cost) and taking the rest as dividends. Dividends do not attract NI.
The employer NI increase to 15% from April 2025, combined with the threshold drop to £5,000, has made the salary-plus-dividends calculation tighter. Talk to your accountant about the optimal split.
Payments on account
If your self-assessment bill (income tax plus NI) exceeds £1,000, HMRC requires payments on account. These are advance payments towards next year's bill, each equal to 50% of the current year's total.
Common mistake: Don't forget to budget for your January and July payments on account to avoid cash flow issues.
This catches out a lot of first-year self-employed tradespeople. Your first self-assessment bill includes the current year's tax AND half of next year's estimated tax. So if you owe £5,000 for the year, your January payment is £7,500 (£5,000 plus a £2,500 payment on account).
Related: see payments on account for the self-employed for practical next steps.
Plan for this. Set aside 25-30% of your profit each month into a separate account. Our cash flow calculator can help you plan for tax payment dates.
Reducing your NI bill legally
Class 4 NI is based on taxable profit, so anything that reduces your profit reduces your NI:
Claim all allowable expenses. Tools, materials, vehicle costs, phone, insurance, accountancy fees, training, protective clothing.
Use capital allowances. The Annual Investment Allowance lets you deduct the full cost of qualifying equipment (tools, machinery, vehicles) up to £1 million per year.
Claim mileage. 45p per mile for the first 10,000 business miles, 25p after that. Read our guide to claiming mileage as a tradesperson.
Pension contributions. Payments into a personal pension reduce your taxable profit and therefore your NI liability.
Key deadlines
Date | What |
|---|---|
5 October | Register for self-assessment (if first year) |
31 October | Paper return deadline |
31 January | Online return deadline + payment of balance + first payment on account |
31 July | Second payment on account |
Miss the 31 January deadline and you face an automatic £100 penalty, rising to £10 per day after 3 months, then further penalties at 6 and 12 months. Interest accrues on unpaid tax from the due date at the HMRC interest rate (currently 7.5%).
Deadline | Action Required | Notes |
|---|---|---|
31 January | Self-assessment payment | Includes previous tax year NI |
31 July | Second payment on account | Covers current tax year |
5 October | Register for self-assessment | If newly self-employed |
31 January | Submit self-assessment return | Online submission deadline |
6 April | Start of new tax year | Review NI thresholds and rates |
Frequently asked questions
Do I still need to pay Class 2 NI?
No. Class 2 was abolished in April 2024. If your profits exceed £6,725, you get state pension credits automatically. If below £6,725, you can pay Class 2 voluntarily at £3.45/week.
Worth pairing this with our guide to sole trader vs limited company.
How much NI will I pay on £40,000 profit?
Class 4 NI on £40,000 profit: (£40,000 - £12,570) x 6% = £1,645.80. No Class 2 is due.
Is National Insurance going up in 2026?
The employer NI rate increased to 15% from April 2025. Self-employed Class 4 rates (6%/2%) have not been announced to change for 2026/27, but check the Autumn Statement.
Can I reduce NI by paying into a pension?
Yes. Personal pension contributions reduce your taxable profit, which reduces both income tax and Class 4 NI. The annual allowance for pension contributions is £60,000 (2025/26).
What happens if I do not pay NI?
Class 4 NI is collected through self-assessment. Not filing or paying triggers the same penalties and interest as unpaid income tax. Missing NI payments also means missing qualifying years for your state pension.
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