Class 4 National Insurance 2026/27: Rates, Thresholds & Guide

For freelancers, sole traders, contractors and self-employed workers, Class 4 National Insurance can be one of the least understood parts of the UK system. It appears through Self Assessment, alongside Income Tax, but it is a separate charge with its own thresholds and rates.

For 2026/27, the Class 4 NIC rate is 6% on relevant profits above £12,570 up to £50,270. A lower 2% rate applies above £50,270. Understanding these bands can help self-employed people budget and avoid surprises when a tax bill arrives.

What Is Class 4 National Insurance?

Class 4 National Insurance is a contribution charged on profits from self-employment. It commonly applies to sole traders, freelancers, consultants, contractors and members of business partnerships.

Unlike Class 1 National Insurance, which employees normally pay through PAYE, Class 4 NIC is generally calculated through Self Assessment. It is not the same as Income Tax, even though both may use business profit information.

The key point now: Class 4 National Insurance is profit-based, not a charge on every pound received.

Class 4 National Insurance Rates for 2026/27

The Class 4 National Insurance rates for 2026/27 are:

| Relevant self-employed profits | Class 4 rate |
| Up to £12,570 | 0% |
| More than £12,570 up to £50,270 | 6% |
| Above £50,270 | 2% |

The first threshold is the Lower Profits Limit. No Class 4 charge applies to profits at or below £12,570.

The upper threshold is the Upper Profits Limit, set at £50,270. The 2% rate applies only to the portion above £50,270. You do not apply one rate to the entire profit.

How Is Class 4 NIC Calculated?

The starting point is your relevant self-employed profit. In broad terms, this means business income less allowable business expenses.

For example, if a business receives £35,000 and has £8,000 of allowable expenses, the relevant profit is £27,000. The Class 4 NIC calculation then applies the relevant rate to the amount above £12,570.

Allowable costs can include business insurance, professional fees, qualifying travel, office costs and certain equipment. A cost is not automatically allowable because it was paid from a business account.

Class 4 National Insurance Examples

A £10,000 self-employed profit is below £12,570, so Class 4 NIC is £0.

With £20,000 of profit, £7,430 falls in the 6% band. The Class 4 amount is £445.80.

With £40,000 of profit, £27,430 is charged at 6%, producing £1,645.80.

With £55,000 of profit, £37,700 is charged at 6%, producing £2,262. The remaining £4,730 is charged at 2%, adding £94.60. Total Class 4 NIC is £2,356.60.

Crossing £50,270 does not mean the whole profit is charged at 2%.

Class 2 vs Class 4 National Insurance

One of the biggest sources of confusion is the difference between Class 2 National Insurance and Class 4 National Insurance.

For 2026/27, the Small Profits Threshold is £7,105. If self-employed profits are at least £7,105, Class 2 contributions are treated as paid for National Insurance record purposes, so you do not normally make an actual Class 2 payment.

If profits are below £7,105, you can choose voluntary Class 2 contributions. The Class 2 National Insurance rate 2026/27 is £3.65 a week.

Class 4 is different. It is profit-based and becomes payable when relevant profits exceed £12,570.

Does Class 4 Count Towards the State Pension?

No. Paying Class 4 NIC does not itself provide a State Pension qualifying year.

Some self-employed people assume that paying more National Insurance automatically strengthens their State Pension record. Class 2 rules and National Insurance credits are important for this purpose.

What If You Are Employed and Self-Employed?

Having a PAYE job does not automatically remove Class 4 National Insurance liability from self-employed work.

Your employer normally deducts Class 1 National Insurance from employment earnings, while self-employed activity may create Class 4 liability through Self Assessment. HMRC considers the overall circumstances when calculating what is due.

This is a recurring question in UK personal finance discussions. Class 1 relates to employment, while Class 4 relates to self-employed profits.

When Do You Pay Class 4 NIC?

Most people pay Class 4 National Insurance through Self Assessment.

For 2026/27, the online Self Assessment return and main payment are generally due by 31 January 2028. Where payments on account apply, the second payment is normally due on 31 July 2028.

Payments on account are advance payments toward a future Self Assessment liability, not an extra tax charge. They can make a first bill feel higher than expected.

Making Tax Digital and Self-Employment

The 2026/27 tax year also brings Making Tax Digital for Income Tax for certain sole traders and landlords. The first phase generally covers qualifying income above £50,000 based on the relevant earlier tax year.

Those in scope need compatible software, digital records and quarterly updates. This does not change the basic Class 4 NIC rates.

Common Class 4 National Insurance Mistakes

A common mistake is calculating Class 4 NIC on turnover instead of profit. Another is assuming Class 4 is simply another name for Income Tax.

Some people also believe that having an employer means they do not owe Class 4, or that paying Class 4 creates a State Pension qualifying year. Neither assumption is correct.

Remember that the 2% rate applies only to the amount above £50,270.

Final Word

For 2026/27, Class 4 National Insurance follows three bands: 0% up to £12,570, 6% from £12,570 to £50,270, and 2% above £50,270.

For self-employed workers, the priorities are to calculate profit correctly, understand Class 2 and Class 4, keep accurate records, and budget for Self Assessment. Reviewing your National Insurance position is also important when profits are low or when you have both employment and self-employment income.

See News will continue covering UK tax, National Insurance, self-employment and other changes affecting household finances.