What are Class 2 and Class 4 National Insurance Contributions (NIC’s)? | How to pay National Insurance when self-employed
Class 2 National Insurance – Changes from April 2024
Who Pays?
As of 6 April 2024, most self-employed people no longer need to pay Class 2 NICs if their profits are above the Small Profits Threshold (SPT) of £6,725.
However:
- If your profits are above the SPT, you will receive NI credits automatically without needing to pay Class 2 NICs.
- If your profits are below the SPT, you can choose to pay voluntary Class 2 NICs to protect your entitlement to benefits.
2024–25 Rate:
- Voluntary Class 2 NICs: £3.45 per week
What Do Class 2 NICs Count Towards?
Voluntary Class 2 contributions can help you qualify for:
- Basic State Pension
- Maternity Allowance
- Employment and Support Allowance (ESA)
- Bereavement Support Payments
Class 4 National Insurance – Still Required
Who Pays?
You must pay Class 4 NICs if your annual profits are £12,570 or more.
2024–25 Rates:
- 6% on profits between £12,570 and £50,270
- 2% on profits over £50,270
This rate has decreased from the previous 9% in 2023–24, helping to reduce the NIC burden on self-employed earners.
How Do I Pay These NICs?
Both Class 4 NICs and any voluntary Class 2 NICs are typically paid through your Self Assessment Tax Return.
If you’re not registered for Self Assessment but want to make voluntary Class 2 contributions, HMRC will issue a payment request if applicable.
Exemptions from Class 2 NICs
Even before the 2024 change, certain individuals were exempt from paying Class 2 NICs. These exemptions still apply. You are not liable for Class 2 NICs if you:
- Are an examiner, moderator, or invigilator
- Run a business involving land or property
- Are a minister of religion without a salary or stipend
- Make investments for yourself or others (not as a business and without fees/commission)
If you fall into these groups, you may still wish to voluntarily pay Class 2 NICs to ensure your State Pension record remains intact.