What types of national insurance do you pay if your self-employed?
There are two types of National Insurance contributions (NICs) payable by most self-employed people. These are known as Class 2 NICs and Class 4 NICs.
Who needs to pay Class 2 NICs?
Class 2 NICs are paid by all self-employed taxpayers unless they earn under the Small Profits Threshold (SPT), currently £6,725, which remove the necessity to pay NICs. Class 2 NICs are currently payable at a flat weekly rate of £3.45 for the 2023-24 tax year. Class 2 NICs count towards payments such as the basic State Pension, the employment and support allowance, maternity allowance and bereavement benefits.
Who needs to pay Class 4 NICs?
In addition, most self-employed people are also required to pay Class 4 NICs. The self-employed are required to pay Class 4 NICs (as well as to Class 2 NICs) if their profits are £12,570 or more a year. Class 4 NIC rates for the tax year 2023-24 are 9% for chargeable profits between £12,570 and £50,270 plus 2% on any profits over £50,270.
Paying your NICs
In Order to pay Class 2 NICs and Class 4 NICs most people will deal with this through their Self – Assessment Tax return. Those who do not pay via self-assessment should be sent a payment request by HMRC by the end of October. If you are looking for more information we have many blogs helping you complete your self assessment tax return that can be found here.
Exemptions from Class 2 NICs
There is also a specific list of jobs where class 2 NICs are not payable. These are:
• examiners, moderators, invigilators and people who set exam questions;
• people who run businesses involving land or property;
• ministers of religion who do not receive a salary or stipend; and
• people who make investments for themselves or others - but not as a business and without getting a fee or commission.
If you fall within any of these categories, it may be beneficial to get a State Pension forecast and examine whether to make voluntary Class 2 NICs to make up missing years.
Contact us
If you need help and advice as a self employed person with their national insurance contributions. If your Unsure weather you need to pay Class 2 NICs or Class 4 NICs contact our specialist tax team today for further support.