What is Class 4 National Insurance?
A profit-based NI contribution paid by self-employed people — 6% on profits between £12,570 and £50,270.
Key Facts
- ✓ 6% on profits between £12,570 and £50,270
- ✓ 2% on profits above £50,270
- ✓ Does not count towards state pension entitlement
- ✓ Paid through Self Assessment
- ✓ Applies to annual trading profits
- ✓ Maximum contribution caps if also employed
Current Rates (2025/26)
- ▸ Lower rate: 6% (£12,570-£50,270)
- ▸ Upper rate: 2% (above £50,270)
- ▸ Lower Profits Limit: £12,570
- ▸ Upper Profits Limit: £50,270
Explanation
Class 4 National Insurance is a profit-based contribution paid by self-employed people on their annual trading profits. For 2025/26, the rates are 6% on profits between £12,570 (the Lower Profits Limit) and £50,270 (the Upper Profits Limit), and 2% on any profits above £50,270. Unlike Class 2 NI, Class 4 contributions do not count towards your state pension or benefit entitlement — they are purely a tax. Class 4 NI is calculated and paid as part of your annual Self Assessment tax return. If you are both employed and self-employed, you pay Class 1 NI on your employment income and Class 4 NI on your self-employment profits, though there are maximum contribution caps to prevent double-charging. The Lower Profits Limit for Class 4 is aligned with the Personal Allowance for income tax, simplifying the calculation.
Try the calculator: Use our free calculator to see how class 4 national insurance affects your finances.
Self-Employed Tax Calculator →Other Glossary Terms
The system HMRC uses to collect income tax and National Insurance directly from employee wages.
National InsuranceA UK tax on earnings and self-employed profits that funds the state pension, NHS, and benefits.
Personal AllowanceThe amount of income you can earn each year before paying income tax — currently £12,570.
Basic Rate (20%)The 20% income tax rate applied to taxable income between £12,571 and £50,270.
Higher Rate (40%)The 40% income tax rate applied to taxable income between £50,271 and £125,140.
Additional Rate (45%)The 45% income tax rate applied to taxable income above £125,140.
Frequently Asked Questions
What does class 4 national insurance mean?
A profit-based NI contribution paid by self-employed people — 6% on profits between £12,570 and £50,270.
Why does class 4 national insurance matter?
Understanding class 4 national insurance helps you make informed financial decisions and ensure you pay the correct amount of tax. Getting it wrong could mean overpaying or underpaying HMRC, which may result in penalties or missed savings. Use our calculators to see how class 4 national insurance applies to your personal situation.
Where can I find more information about class 4 national insurance?
HMRC publishes official guidance on GOV.UK for all UK tax topics. For a quick overview, our glossary entries are written in plain English and updated each tax year. You can also use our free online calculators to model different scenarios and understand how changes to your income, deductions, or allowances affect your overall tax position.