National Insurance for the Self-Employed in 2025/26: What You Pay and When

National Insurance is often one of the least well-understood parts of the tax system for self-employed individuals. Unlike income tax, it doesn’t always feel visible, and the rules have changed several times in recent years.

For the 2025/26 tax year, the structure of National Insurance for the self-employed is simpler than it used to be — but it still plays an important role in both your tax bill and your entitlement to certain state benefits.

In this post, we explain how National Insurance works for the self-employed in 2025/26, what contributions apply, how they are calculated, and when they are paid.

What National Insurance Is (and Why It Matters)

National Insurance contributions (NICs) are separate from income tax, even though they are often paid at the same time.

For the self-employed, National Insurance serves two main purposes:

• It contributes towards state benefit entitlements, including the State Pension
• It forms part of the overall tax cost of being self-employed

Although NICs are collected through the Self Assessment system, they are calculated under their own rules and thresholds.

A Key Change: Class 2 National Insurance

One of the most significant recent changes is that Class 2 National Insurance is no longer payable.

Historically, most self-employed individuals paid:

• Class 2 NIC at a flat weekly rate, and
• Class 4 NIC based on profits

From April 2024 onwards, Class 2 contributions were abolished as a payment, and this position continues into 2025/26.

This does not mean Class 2 has disappeared entirely — it still exists for benefit entitlement purposes, but it is no longer something most people pay separately.

How State Pension Entitlement Now Works

Even though Class 2 is no longer payable, National Insurance credits are still awarded to protect entitlement to the State Pension and certain benefits.

In practice:

• If your self-employed profits are above the Small Profits Threshold, you are treated as having paid Class 2 for benefit purposes
• You do not need to make a separate payment to receive these credits

This means many self-employed individuals will continue to build up qualifying years without paying Class 2 NIC directly.

Class 4 National Insurance: The Main Contribution

For the self-employed, Class 4 National Insurance is now the primary contribution that affects your tax bill.

Class 4 NIC is:

• Calculated as a percentage of taxable profits
• Paid through Self Assessment
• Due at the same time as income tax

How Class 4 Is Calculated

In broad terms:

• Class 4 NIC is charged on profits above the Lower Profits Limit
• A main rate applies up to an upper threshold
• A lower rate applies to profits above that upper threshold

The exact thresholds and rates are set by HMRC for each tax year and can change over time, but the structure remains consistent.

Example: How Class 4 National Insurance Works

If you are self-employed and your profits fall within the main Class 4 band:

• You pay Class 4 NIC on the portion of profit within that band
• Any profit above the upper threshold is charged at a lower rate
• Profit below the lower limit is not subject to Class 4 NIC

This means your National Insurance liability increases as profits rise, but not in a straight line.

When You Pay National Insurance

Self-employed National Insurance is paid as part of your Self Assessment tax bill.

This usually includes:

• Income tax
• Class 4 National Insurance
• Payments on account (where applicable)

The main payment deadline is 31 January following the end of the tax year, with a possible second payment on account due on 31 July.

National Insurance is not paid monthly — it is settled alongside your annual tax calculation.

Payments on Account and National Insurance

One common source of confusion is that payments on account include National Insurance, not just income tax.

If payments on account apply to you:

• HMRC estimates your next year’s bill based on the current year
• This estimate includes both income tax and Class 4 NIC

This is why January payments can feel disproportionately high, particularly in the early years of self-employment.

What Happens if Profits Are Low?

If your profits are:

• Below the Small Profits Threshold, and
• You do not receive NI credits automatically

You may have the option to:

• Make voluntary contributions to protect your State Pension record

Whether this is worthwhile depends on your wider circumstances, including other sources of National Insurance credits (for example, from employment).

Self-Employment Alongside Employment

Many people are both employed and self-employed.

In this situation:

• PAYE income is subject to Class 1 NIC
• Self-employed profits are subject to Class 4 NIC
• The two systems operate independently

Being employed does not remove the requirement to pay Class 4 NIC on self-employed profits, although it may affect whether additional voluntary contributions are worthwhile.

National Insurance vs Income Tax

Although they are calculated together, National Insurance and income tax are not the same thing.

Key differences include:

• Different thresholds and rates
• Different treatment of losses and reliefs
• Different links to benefit entitlement

Understanding this distinction helps explain why tax bills don’t always move in line with profits in the way people expect.

Common Misunderstandings

Some of the most frequent areas of confusion include:

• Assuming National Insurance no longer applies to the self-employed at all
• Believing Class 2 abolition means no impact on pension entitlement
• Forgetting that payments on account include NIC
• Expecting NIC to stop once income tax bands are exceeded

These misunderstandings often only surface when a Self Assessment bill is calculated.

Summary

For the 2025/26 tax year, National Insurance for the self-employed is simpler than in the past, but it remains an important part of the overall tax picture.

In summary:

• Class 2 is no longer payable, but still relevant for benefit entitlement
• Class 4 NIC is charged on self-employed profits
• National Insurance is paid through Self Assessment
• Payments on account often include NIC as well as income tax

Understanding how National Insurance fits into your overall position makes tax bills more predictable and planning far easier.

If you are self-employed and would like to understand how National Insurance applies to your profits, how it interacts with payments on account, or whether your entitlement record is being protected properly, a short review can often clarify things quickly. You can book a free 30-minute call to talk through your position and make sure everything is being handled correctly for 2025/26.