Self-employed individuals are usually required to pay Class 4 National Insurance contributions (NICs) if their annual profits exceed £12,570. For the 2024-25 tax year, Class 4 NIC rates are set at 6% (down from 9% in 2023-24) on profits between £12,570 and £50,270, with an additional 2% charged on profits above £50,270.
Certain groups are exempt from paying Class 4 NICs, including:
Individuals under 16 at the start of the tax year.
Individuals over State Pension age at the start of the tax year. If someone reaches State Pension age during the tax year, they remain liable for Class 4 NICs for the entire tax year.
Trustees and guardians of incapacitated individuals are exempt from paying Class 4 NICs on that income.
The Class 4 NIC rate is lower than the corresponding rate for employees, who pay 8% on the same income levels. Both employees and the self-employed contribute 2% on income above the higher rate threshold.
The majority of individuals pay Class 4 National Insurance via self-assessment.
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