Class 4 National Insurance Explained
A profit-based NI contribution for self-employed people. Unlike Class 2, the amount scales with your earnings. Paid through Self Assessment, not PAYE.
What is Class 4 NI?
Class 4 National Insurance is the profit-based contribution that self-employed individuals pay alongside Income Tax. It applies to net self-employment profits above the Lower Profits Limit of £12,570. Unlike Class 2 NI (which is a flat weekly rate), Class 4 increases as your profits grow. Class 4 does not build entitlement to contributory benefits; only Class 2 does that.
How it works
For 2025-26, the rates are:
| Profit band | Rate |
|---|---|
| Below £12,570 | 0% |
| £12,570 to £50,270 | 6% |
| Above £50,270 | 2% |
The maximum Class 4 on the main band is £2,262 per year (6% of £37,700). Above that, 2% applies without an upper limit. Class 4 is calculated on your tax return and paid in January and July alongside your tax payments on account.
Real example
Fiona is a self-employed consultant with net profits of £60,000. Her Class 4 NI:
| Calculation | Amount |
|---|---|
| 6% on £37,700 (£12,570 to £50,270) | £2,262 |
| 2% on £9,730 (£50,270 to £60,000) | £194.60 |
| Total Class 4 | £2,456.60 |
On top of this, Fiona pays £179.40 in Class 2 NI and her Income Tax bill. Her combined tax and NI is significantly lower than an employee earning £60,000 through PAYE, because Class 4 rates (6%/2%) are lower than employee NI rates (8%/2%).
Who does this affect?
All self-employed individuals with profits above £12,570. You stop paying Class 4 when you reach State Pension age. If you are both employed and self-employed, you may pay Class 1 NI on your salary and Class 4 on your self-employment profits, but there is a maximum annual NI cap to prevent double-charging.
HMRC source
gov.uk/self-employed-national-insurance-rates details both Class 2 and Class 4 rates and thresholds.
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