National Insurance for self-employed tradespeople in 2026

What changed in April 2024

The biggest shake-up to self-employed National Insurance in years happened in April 2024. Class 2 NI contributions were abolished. Previously, every self-employed person paid £3.45 per week in Class 2 NI, which bought them a qualifying year towards their state pension.

At the same time, Class 4 NI rates were cut from 9% to 6% on the main band. This was the second cut in six months, following a reduction from 9% to 8% in January 2024.

For a tradesperson earning £40,000 profit, the combined effect saves around £650 a year compared to the 2023/24 rates. Not life-changing money, but not nothing either.

Current NI rates for 2025/26

Class 4 NI is calculated on your taxable profit after allowable expenses. It is collected through self-assessment, so you pay it in January and July along with your income tax.

How to calculate your NI bill

Take your taxable profit (turnover minus allowable expenses). Then:

1. Ignore the first £12,570 (the lower profits threshold)
2. On profits from £12,570 to £50,270: multiply by 6%
3. On anything above £50,270: multiply by 2%

Example: A plumber with £45,000 taxable profit.

• £12,570 to £45,000 = £32,430 at 6% = £1,945.80
• Nothing above £50,270
• Total Class 4 NI: £1,945.80

Example: An electrical contractor with £65,000 taxable profit.

• £12,570 to £50,270 = £37,700 at 6% = £2,262
• £50,270 to £65,000 = £14,730 at 2% = £294.60
• Total Class 4 NI: £2,556.60

Use our self-assessment calculator to work out your combined income tax and NI liability.

The state pension question

Here is where abolishing Class 2 NI gets complicated. Class 2 contributions used to buy you qualifying years towards the state pension. You need 35 qualifying years for the full new state pension (currently £221.20 per week) and at least 10 years for any state pension at all.

Now that Class 2 is abolished, how do self-employed people build up pension entitlement?

HMRC has introduced automatic credits. If your profits are above £12,570, you get a qualifying year automatically through Class 4 NI. No extra cost, no extra paperwork.

If your profits are between £6,725 and £12,570, you also get credits automatically (this used to happen through Class 2).

If your profits are below £6,725, you can still pay voluntary Class 2 NI at £3.45/week (£179.40/year) to get a qualifying year. This is almost always worth doing. Compare £179.40 to the annual value of a full state pension year: roughly £328 per year for life from state pension age. That is an extraordinary return.

NI and limited companies

If you operate through a limited company, different rules apply. As a company director, you pay:

• Class 1 Employee NI: 8% on salary between £12,570 and £50,270, 2% above that
• Class 1 Employer NI: The company pays 15% on salary above £5,000 (from April 2025)

This is why most contractor accountants advise paying yourself a salary of £12,570 (to get NI credits at zero NI cost) and taking the rest as dividends. Dividends do not attract NI.

The employer NI increase to 15% from April 2025, combined with the threshold drop to £5,000, has made the salary-plus-dividends calculation tighter. Talk to your accountant about the optimal split.

Payments on account

If your self-assessment bill (income tax plus NI) exceeds £1,000, HMRC requires payments on account. These are advance payments towards next year's bill, each equal to 50% of the current year's total.

This catches out a lot of first-year self-employed tradespeople. Your first self-assessment bill includes the current year's tax AND half of next year's estimated tax. So if you owe £5,000 for the year, your January payment is £7,500 (£5,000 plus a £2,500 payment on account).

Plan for this. Set aside 25-30% of your profit each month into a separate account. Our cash flow calculator can help you plan for tax payment dates.

Reducing your NI bill legally

Class 4 NI is based on taxable profit, so anything that reduces your profit reduces your NI:

• Claim all allowable expenses. Tools, materials, vehicle costs, phone, insurance, accountancy fees, training, protective clothing.
• Use capital allowances. The Annual Investment Allowance lets you deduct the full cost of qualifying equipment (tools, machinery, vehicles) up to £1 million per year.
• Claim mileage. 45p per mile for the first 10,000 business miles, 25p after that. Read our guide to claiming mileage as a tradesperson.
• Pension contributions. Payments into a personal pension reduce your taxable profit and therefore your NI liability.

Key deadlines

Miss the 31 January deadline and you face an automatic £100 penalty, rising to £10 per day after 3 months, then further penalties at 6 and 12 months. Interest accrues on unpaid tax from the due date at the HMRC interest rate (currently 7.5%).

Frequently asked questions

Do I still need to pay Class 2 NI?

No. Class 2 was abolished in April 2024. If your profits exceed £6,725, you get state pension credits automatically. If below £6,725, you can pay Class 2 voluntarily at £3.45/week.

How much NI will I pay on £40,000 profit?

Class 4 NI on £40,000 profit: (£40,000 - £12,570) x 6% = £1,645.80. No Class 2 is due.

Is National Insurance going up in 2026?

The employer NI rate increased to 15% from April 2025. Self-employed Class 4 rates (6%/2%) have not been announced to change for 2026/27, but check the Autumn Statement.

Can I reduce NI by paying into a pension?

Yes. Personal pension contributions reduce your taxable profit, which reduces both income tax and Class 4 NI. The annual allowance for pension contributions is £60,000 (2025/26).

What happens if I do not pay NI?

Class 4 NI is collected through self-assessment. Not filing or paying triggers the same penalties and interest as unpaid income tax. Missing NI payments also means missing qualifying years for your state pension.