Class 4 National Insurance 2026/27: Rates and Examples

Quick answer: Class 4 National Insurance is the self-employed NI charge on trading profits. For 2026/27 it is 0% on profits up to £12,570, 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. You pay it through Self Assessment alongside income tax. Class 2 is no longer compulsory.

If you are a sole trader or partner in the UK, Class 4 National Insurance is the second tax on your profits after income tax, and it is easy to forget when you are saving for the January bill. This guide explains the 2026/27 rates, how Class 4 and Class 2 work together now that Class 2 has been reformed, how self-employed NI 2026/27 is paid, and how to estimate yours with real examples. If you have not registered yet, start with how to register as self-employed in the UK.

Note: This is general information, not tax advice. Your own figures depend on your full tax position, so check GOV.UK or an accountant.

Class 4 National Insurance rates and thresholds for 2026/27

HMRC's National Insurance rates and allowances give these figures:

Threshold or rate	2026/27	2025/26
Class 4 lower profits limit	£12,570 a year	£12,570 a year
Class 4 upper profits limit	£50,270 a year	£50,270 a year
Class 4 main rate (between the limits)	6%	6%
Class 4 rate above the upper limit	2%	2%
Class 2 small profits threshold	£7,105 a year	£6,845 a year
Class 2 voluntary weekly rate	£3.65	£3.50
Class 3 voluntary weekly rate	£18.40	Not shown here

The lower profits limit matches the £12,570 personal allowance for income tax, so if your profit is below that level you will normally owe neither income tax nor Class 4 on your trading income.

How Class 2 and Class 4 work together now

Until April 2024, the self-employed paid two charges: a flat weekly Class 2 contribution and a profit-based Class 4 charge. Class 2 is now effectively abolished as a compulsory payment. GOV.UK's page on self-employed National Insurance rates explains the current position:

• Profits of £7,105 or more (2026/27): you are treated as having paid Class 2. You pay nothing, but the year counts towards your State Pension and certain benefits.
• Profits below £7,105: you do not have to pay anything, but you can choose to pay voluntary Class 2 at £3.65 a week (about £189.80 for a 52-week year) to fill the gap in your National Insurance record.
• Profits above £12,570: you pay Class 4 at 6% and 2% as set out above.

Voluntary Class 2 is far cheaper than voluntary Class 3 at £18.40 a week, which is why low earners who qualify often choose it.

Why Class 4 matters for your State Pension

Class 4 itself does not build entitlement to the State Pension; that comes from the Class 2 position. Under the current rules, a profit at or above the small profits threshold gives you a qualifying year automatically, and a profit below it leaves a gap unless you pay voluntary Class 2. So two numbers matter each year: £7,105, which decides whether your year counts, and £12,570, which decides whether you start paying Class 4. A sole trader with £10,000 profit sits between them: the year counts towards the State Pension and no Class 4 is due.

How to calculate Class 4 National Insurance

1. Work out your trading profit. Take your total sales (every invoice you issued for the tax year) and subtract allowable expenses. Our list of allowable expenses for the self-employed covers what you can claim.
2. Subtract the lower profits limit. Deduct £12,570. If the result is zero or negative, no Class 4 is due.
3. Apply 6% to the main band. Charge 6% on the profit between £12,570 and £50,270, a band of £37,700.
4. Apply 2% to the rest. Charge 2% on any profit above £50,270.
5. Add the two figures. That is your Class 4 for the year, which HMRC adds to your Self Assessment bill.

Worked examples for 2026/27

Annual profit	6% band	2% band	Class 4 total
£10,000	£0	£0	£0
£20,000	(£20,000 - £12,570) x 6% = £445.80	£0	£445.80
£30,000	£17,430 x 6% = £1,045.80	£0	£1,045.80
£45,000	£32,430 x 6% = £1,945.80	£0	£1,945.80
£50,270	£37,700 x 6% = £2,262.00	£0	£2,262.00
£70,000	£37,700 x 6% = £2,262.00	£19,730 x 2% = £394.60	£2,656.60

Worked example: a designer with £58,000 sales

Tom is a sole trader graphic designer. In 2026/27 he issues invoices totalling £58,000 and has £8,000 of allowable expenses, so his profit is £50,000.

• Profit above the lower limit: £50,000 - £12,570 = £37,430.
• All of it is below the £50,270 upper limit, so it is charged at 6%: £37,430 x 6% = £2,245.80.
• Class 2: his profit is above £7,105, so he is treated as having paid it. Cost £0.

Tom's Class 4 is £2,245.80, about 3.9% of his profit and payable on top of his income tax. If he finds another £1,000 of genuine expenses, his Class 4 drops by £60 to £2,185.80, and his income tax falls too.

Your effective Class 4 rate

Because the first £12,570 is free of Class 4, the effective rate on your whole profit is well below 6%. On £20,000 profit it is about 2.2% (£445.80 / £20,000). On £30,000 it is about 3.5%, on £50,270 it is about 4.5%, and on £70,000 it is about 3.8% because the 2% band starts to pull the average down. This is a useful sense check: if your estimate shows Class 4 above 4.5% of profit, something in the calculation is wrong.

Turning the annual figure into a monthly saving

Tom's £2,245.80 Class 4 works out at £187.15 a month (£2,245.80 / 12). If he invoices £58,000 over the year, that is a little under 4% of his sales. The easiest habit is to move a fixed percentage of every customer payment into a separate tax savings account the day it arrives, covering income tax and Class 4 together. When the January bill lands, the money is already there.

Checking HMRC's calculation

When you submit your return, HMRC's calculation shows Class 4 as a separate line. Compare it with your own figure using the steps above. Differences usually come from a profit figure that includes or excludes something you did not expect, such as a balancing adjustment or a loss brought forward, rather than from the rates themselves.

How and when you pay self-employed NI

Class 4 has no separate payment system. You report your profit on your Self Assessment tax return, HMRC calculates Class 4, and it becomes part of the same bill as your income tax. For the 2026/27 tax year:

• The return and the balancing payment are due by 31 January 2028.
• If your bill is over £1,000 and less than 80% of your tax was collected at source, you also make payments on account, which include Class 4. The first falls on 31 January 2027 and the second on 31 July 2027.
• Late payment brings penalties and interest, covered in our guide to the Self Assessment late penalty.

Sole traders who are or will be in Making Tax Digital for Income Tax send quarterly updates, but Class 4 is still calculated on the annual figures and paid on the usual dates.

Class 4 compared with other National Insurance classes

Class	Who pays	Basis	How it is paid
Class 1 (employee)	Employees, including company directors	Salary above the threshold	Through payroll (PAYE)
Class 1 (employer)	Employers	Employees' pay above the secondary threshold	Through payroll
Class 2	Self-employed with profits under £7,105 (voluntary)	Flat £3.65 a week	Self Assessment
Class 3	Anyone filling a record gap	Flat £18.40 a week	Direct to HMRC
Class 4	Self-employed sole traders and partners	6% and 2% of profits	Self Assessment

Employer contributions are a different subject; see employer National Insurance 2026/27 if you are taking on staff.

Sole trader or limited company: the NI difference

Class 4 is one reason people compare structures. A limited company director pays no Class 4. Instead, salary attracts Class 1 contributions and dividends attract dividend tax, while the company pays Corporation Tax on its profits. Whether that is cheaper depends on your profit level, your expenses and how you extract money, which our guides on sole trader vs limited company and director salary vs dividends explore.

Class 4 for side hustles, partners and losses

If you are employed and self-employed

Class 4 looks only at your self-employed profit, not your total income. The lower profits limit applies to that profit on its own. Suppose Aisha earns a £30,000 salary and makes £8,000 profit from a weekend photography business in 2026/27. Her employer deducts Class 1 from the salary as normal. Her £8,000 profit is below £12,570, so her Class 4 is £0. It is above the £7,105 small profits threshold, so she is treated as having paid Class 2 and gets the credit without paying anything. She still pays income tax on the £8,000, because her salary has already used her personal allowance. Our guide to side hustle taxes covers the income tax side.

Partnerships

Each partner pays Class 4 on their own share of the partnership's profit, through their own Self Assessment return. If a partnership makes £90,000 and two partners share it equally, each has £45,000 of profit and, using the table above, each pays £1,945.80 in Class 4. The partnership itself does not pay Class 4.

Losses

If your business makes a loss, no Class 4 is due for that year. A trading loss carried forward can reduce the profits on which Class 4 is charged in later years, so keep a record of it and make sure it is claimed on your return.

Common Class 4 mistakes

• Saving for income tax only. Class 4 adds 6% on most of a typical sole trader's profit, which is easy to miss in a rough tax estimate.
• Using turnover instead of profit. Class 4 is charged on profit after allowable expenses, so a low-margin business with high sales may owe much less than it fears.
• Assuming Class 2 is still a bill. If your profit is £7,105 or more, Class 2 is treated as paid; you do not need to pay it separately.
• Forgetting payments on account. Class 4 is included in the advance payments, so a first-year bill can look far bigger than expected.
• Mixing business and personal money. A separate account makes it far easier to prove profit and claim expenses.

Tips to manage Class 4 National Insurance

• Save a percentage of every invoice. For a basic rate taxpayer, income tax at 20% plus Class 4 at 6% means setting aside around a quarter of profit above £12,570 is a reasonable starting point.
• Track every invoice. Numbered invoices from the UK invoice generator give you an accurate sales total, and our sole trader invoice guide shows what to include.
• Claim all allowable expenses. Each £100 of expenses saves £6 in Class 4 in the main band.
• Check small side income. If your gross trading income is £1,000 or less, the trading allowance may mean you do not need to report it at all.
• Consider voluntary Class 2 in low-profit years. At £3.65 a week it can protect your State Pension record.
• Review your position before 31 January. If your profit has dropped sharply, you can ask HMRC to reduce your payments on account, which include Class 4, so you are not paying in advance on profits you no longer expect to make. Only reduce them if you are confident, because interest is charged if the reduced payments turn out to be too low.

Plan for Class 4 National Insurance from your first invoice

Class 4 National Insurance is predictable: nothing up to £12,570, 6% up to £50,270 and 2% above that for 2026/27. The difficult part is having the money ready in January and July. Issue clear, numbered invoices with the free invoice generator, keep your expenses tidy, and you will know your self-employed NI bill long before HMRC asks for it. When your invoice looks right, download it as a PDF and send it straight to your client.