Class 2 vs Class 4 National Insurance, explained
Self-employed National Insurance comes in two flavours, and they work completely differently. Class 4 is a percentage of your profit. Class 2 was a small flat weekly amount. Both have changed a lot recently, so a figure you remember from a couple of years ago is probably out of date.
Class 4: the percentage one
Class 4 is the National Insurance that actually moves the needle on your bill. It's charged on your self-employment profit between two thresholds, at a main rate, and then at a lower rate on everything above the upper threshold. For 2024-25 and 2025-26:
| Profit | Class 4 rate |
|---|---|
| Up to £12,570 | Nothing |
| £12,570 to £50,270 | 6% |
| Over £50,270 | 2% |
That 6% main rate is a recent cut. It was 9% for 2023-24 and, thanks to the mid-year Health and Social Care Levy in 2022-23, an unusual blended 9.73%. This is exactly why the same profit produces a different bill depending on the year, and why our estimator holds a separate rate set for each year.
Class 2: the flat one that's fading out
Class 2 used to be a flat weekly charge: £3.45 a week in 2023-24, which added up to £179.40 for the year. It mattered less for the money and more for your record: paying it earned you a qualifying year towards the State Pension and certain benefits.
From 2024-25 the rules changed. Class 2 is no longer required for most self-employed people. If your profit is above the small profits threshold, you still get the qualifying year, but it's treated as paid. You don't hand over the weekly amount. On an SA302 for 2024-25 onwards you'll typically see Class 2 shown as £0.00.
If your profit is below the small profits threshold, you can still choose to pay Class 2 voluntarily to protect your State Pension record. For many low-profit years that's a cheap way to keep the year qualifying, but whether it's worth it depends on your wider National Insurance history.
How the two fit into your bill
On the SA302, National Insurance appears after the Income Tax section: Class 4 shown across its bands, then a Class 2 line, then a combined "Total Class 2 and Class 4 National Insurance contributions due". That total is added to your Income Tax to give the final figure.
What Class 4 does and doesn't buy you
Unlike Class 2, Class 4 doesn't earn you any extra benefit entitlement. It's effectively a second layer of tax on self-employment profit. That feels unfair to a lot of sole traders, but it's worth understanding so you plan for it: on profits in the basic-rate zone you're really paying 20% Income Tax plus 6% Class 4, so 26% of each extra pound goes in tax and NI combined.
Employees, directors and mixed income
If you also have a job, you'll pay Class 1 National Insurance through PAYE on that salary, separately from your self-employment. There are annual maximum rules that stop you overpaying across classes, but they're niche. For most sole traders the picture is simple: Class 4 on profit, and Class 2 now usually treated as paid. To see your own numbers for any year from 2022-23 to 2025-26, run them through the estimator.