National Insurance Contributions

For employees’ NIC, see Employee Taxation page.

Self-employed people pay:

weekly Class 2 contribution of £2.65pw, unless they claim exception for small earnings (below £5,595). Can be paid monthly or six-monthly by direct debit
Class 4 NIC at 9% of taxable profits between £7,605 and £42,475. Profits over £42,475 will be charged at 2%. This is assessed and paid with the self-assessment income tax on profits

Class 3 voluntary NIC may be paid at £13.25 per week by someone who is not in work but who wishes to maintain state pension rights.

Annual limits

Someone who is both employed and self-employed will pay Class 1, Class 2 and Class 4 NIC. It is possible to apply for deferment of Class 4 so that the Class 1 paid on earnings can be taken into account. Class 4 will then be charged through self-assessment at only 2%, and the overall balance of liability will be settled at a later date.