If you’re self-employed, you’ll have come across Class 2 and Class 4 National Insurance contributions — probably on your Self Assessment tax return, possibly without fully understanding what each one is for or how they’re calculated. You’re not alone. The rules changed significantly in April 2024, and the way HMRC communicates those changes hasn’t always helped matters.

Class 2 and Class 4 National Insurance are the two types of NI that sole traders and self-employed professionals pay. They serve different purposes, sit on different thresholds, and have both changed in the last couple of years. Understanding the distinction matters — not just because it affects your tax bill, but because one of them directly influences your entitlement to the State Pension.

In this post we’ll break down what each class is, what the current rates look like for 2026/27, and flag the one situation where paying voluntarily is genuinely worth thinking about.

The two classes of self-employed National Insurance work very differently, even though they often appear together on the same Self Assessment return.

Class 4 NI

Class 4 is the main NI charge for the self-employed. It’s calculated as a percentage of your taxable profits, in a similar way to Income Tax. For 2026/27, the rates are:

• 6% on profits between £12,570 and £50,270
• 2% on profits above £50,270

It doesn’t buy you anything specific in the way that employee NI contributions do. It’s essentially a tax on self-employment income, applied at a lower rate than the equivalent employee contribution to reflect the fact that self-employed people don’t receive the same employment-related state benefits.

Class 2 NI

Class 2 is — or was — a flat weekly charge. Its purpose was to count as a qualifying year towards contributory benefits, most importantly the State Pension. At £3.65 per week for 2026/27, it’s relatively small in cash terms, but it has an outsized importance for anyone building up their qualifying year count towards the State Pension. You need 35 qualifying years to receive the full new State Pension, so each year counts.

These two classes are paid together via Self Assessment, usually as part of your January and July payment on account cycle.

The landscape shifted meaningfully in 2024. From 6 April 2024, the government removed the legal requirement to pay Class 2 contributions for self-employed people with profits above £12,570. Crucially though — and this is the part that got lost in many of the headlines — it was not abolished outright.

Instead, HMRC introduced a credit system. If your profits are above the small profits threshold (£7,105 for 2026/27), you’re treated as though you’ve paid Class 2 contributions, meaning you still accumulate a qualifying year for the State Pension without handing over any money. In practical terms, most self-employed people above that threshold now simply don’t see a Class 2 charge at all.

The Class 4 main rate was also reduced by one percentage point at the same time — from 9% to 8% — and then reduced again in subsequent years, arriving at 6% for 2026/27.

Worth noting: there was a period of real confusion during 2024 where HMRC’s systems hadn’t been updated to reflect these changes. Some clients filing early for 2024/25 received letters wrongly adding Class 2 charges to their accounts — in some cases double charges. HMRC acknowledged the issue and committed to correcting affected records, but it served as a reminder that even HMRC’s own computers can lag behind legislative change. If you received an unexpected Class 2 letter around that time and didn’t resolve it, it’s worth checking your SA302.

To put it plainly, here’s where things stand for the 2026/27 tax year:

• Class 2: You are treated as having paid Class 2 (and therefore accrue a qualifying year) if your profits are £7,105 or more. No payment is required. The notional rate, relevant mainly for voluntary payers, is £3.65 per week.
• Class 4: 6% on profits from £12,570 up to £50,270, and 2% on anything above £50,270.

Both are declared and paid through Self Assessment. Most self-employed people will only see Class 4 on their return, with Class 2 effectively running in the background as a credit.

It’s worth remembering that these thresholds have been frozen in recent years as part of a broader fiscal policy. With inflation having pushed many self-employed people’s nominal profits upward, the effective tax burden through Class 4 has increased even as the headline rate was cut. That’s a nuance worth understanding when you’re planning ahead.

If your profits sit below £12,570, you won’t owe Class 4 at all. And if your profits are below £7,105, you won’t automatically accrue a qualifying year either — which brings us to the one scenario where voluntary Class 2 remains genuinely relevant.

For self-employed people with profits below £7,105 — perhaps in the early years of a business, or during a low-income period — HMRC won’t automatically credit a qualifying year. You can, however, choose to pay Class 2 voluntarily at the flat weekly rate of £3.65.

At roughly £190 per year, voluntary Class 2 remains one of the most cost-effective ways to protect your State Pension entitlement if you’d otherwise fall short of a qualifying year. Compare that to the cost of a gap in your NI record and the corresponding reduction in State Pension income over a typical retirement, and the maths is usually straightforward.

The same logic applies if you have gaps in your NI record from earlier years and want to fill them. Class 2 voluntary contributions (for years you were self-employed) are typically cheaper than the equivalent Class 3 voluntary contributions available to employees and those not working.

One area to flag: from 6 April 2026, the rules around paying voluntary Class 2 contributions for time spent working abroad were tightened. Most self-employed people working outside the UK can no longer pay voluntary Class 2 for those periods. If you have international income or spend time working abroad, this is worth specific advice rather than assumptions.

For the vast majority of UK-based self-employed people with profits above the threshold, none of this applies — voluntary Class 2 simply isn’t on the table.