What is self-employed National Insurance?
If you're self-employed, you'll need to make National Insurance contributions on your profits when you earn above a certain amount.
Just as with anyone who works for an employer, building up National Insurance contributions over your working life entitles you to the state pension, plus other benefits, but it can be complicated to calculate.
In September 2021, the government announced plans to introduce a health and social care levy of 1.25 percentage points to be added to UK workers' National Insurance contributions from April 2022. See our news story for the full details.
This guide gives you step-by-step advice to working out your National Insurance bill if you're self-employed.
- File your 2021-22 tax return with the Which? tax calculator. Tot up your tax bill, get tips on where to save and submit your return direct to HMRC with Which?.
Class 2 National Insurance contributions
The Class 2 payment thresholds for NI contributions in 2022-23 are a little more complicated than the year before.
Between 6 April and 5 July, those earning between £6,725 and £9,880 don't pay Class 2 contributions; from 6 July to the end of the tax year, those earning between £6,725 and £12,570 won't pay Class 2 contributions.
The government says the LPL will be set at an annualised threshold of £11,908 (equivalent to 13 weeks at the threshold of £9,880 and 39 weeks at £12,570) to ensure the benefit the self-employed get is in line with employees for 2022-23.
Even though Class 2 contributions are being scrapped, those with profits between the small profits threshold (£6,725) and the lower profits limit (£11,908) will still be able to build-up National Insurance credits to secure entitlement to contributory benefits.
If your earnings exceed £9,880 between 6 April and 5 July, or £12,570 from 6 July onwards, you'll pay Class 2 contributions of £3.15 a week.
In 2021-22, these were £3.05 a week for Class 2 contributions on profits over £6,515. This totals £158.60 for the year.
Class 4 National Insurance contributions
In 2022-23 you will pay Class 4 National Insurance contributions at 10.25% on annual profits between £9,880-£50,270 between April and July 2022 - however, from July the threshold will rise to £12,570 for the rest of the tax year. You'll pay 3.25% on profits over £50,270.
In 2021-22, Class 4 National Insurance contributions were at 9% on annual profits between £9,568-£50,270. This reduced to 2% for profits over £50,270.
- Find out more: small business tax: what you need to pay - if you're a small business owner, this guide lists all the taxes you'll have to deal with - including National Insurance.
National Insurance calculator 2021-22 and 2022-23
Use our National Insurance calculator to discover how much you'll pay in each tax year - simply select the tax year you want from the dropdown list.
The calculator makes standard assumptions about employed and self-employed people to estimate your tax breakdown. So bear in mind that what you will take home also depends on other factors such as your pension contributions and student loan repayments - and can vary depending on your tax code.
To find out your total bill for 2022-23 you will need to check what you will pay between 6 April and 5 July and then again between 6 July and 5 April and add the two figures together.
How does self-employed National Insurance work?
National Insurance contributions are paid by employees, employers and self-employed people until they reach state pension age.
While those on a payroll system will have their contributions taken automatically via PAYE, self-employed people need to organise their own National Insurance payments through their self-assessment tax return.
If you're self-employed, there are three types of National Insurance contribution you may have to pay. These are based on how much profit you make in a year, and are split into classes. Those in self-employment will either be: Class 2, Class 3 or Class 4.
Most people will end up paying Class 2 and Class 4 contributions – a lesser rate on profits exceeding the lowest threshold, and a higher rate on profits that go into the Class 4 boundary.
If you earn below the threshold for Class 2 contributions, you do not need to pay any National Insurance due to having low earnings.
However, you might want to consider making Class 3 voluntary contributions, as gaps in payments could affect your state pension and other benefits. We explain more on Class 3 contributions later on.
- Find out more: National Insurance explained - read our complete guide to National Insurance.
Voluntary National Insurance
Even if you earn below the Class 2 threshold, you may choose to make these contributions anyway at the same rate.
This will allow you to avoid gaps in your payment history, as these gaps may mean you won’t have enough years of contributions to get the full state pension.
Alternatively, you may choose to make voluntary Class 3 contributions, though the rate tends to be higher and you may not qualify for certain benefits. You can find out more in our guide to Class 3 contributions.
You can usually pay voluntary Class 3 contributions for the past six years. The deadline is 5 April each year – so, the deadline to make up gaps for 2015-16 tax year is 5 April 2022.
- Find out more: National Insurance and benefits – which benefits are linked to each type of contribution?
Your National Insurance questions answered
How do I know if I have National Insurance payment gaps?
You may have gaps in your NI record if there was a period of time where you were:
- employed and had low earnings
- unemployed and not claiming benefits
- self-employed but making small profits or
- living abroad.
You can find out whether you have payment gaps by requesting your National Insurance record from HMRC.
You can do this online if you have a Government Gateway account. Alternatively, you can request a printed NI statement by filling out an online form or calling 0300 200 3500.
If you’ve paid National Insurance in the Isle of Man, your records won’t show contributions if you reach state pension age after 5 April 2016.
To find out how much you’ve paid, email the Isle of Man National Insurance office at firstname.lastname@example.org.
You should contact HMRC if you think your National Insurance record is wrong.
What if I’ve lost my National Insurance number?
Your NI number should be printed on any existing letters about tax, pensions or benefits, or on payslips or P60s if you were employed at one time.
If you still can’t find it, fill in HMRC form CA5403 and send it to the address on the form, or contact the National Insurance numbers helpline – advisers are available on webchat, you can fill in a form online, or you can call 0300 200 3500.
HMRC won’t tell you your NI number over the phone – they’ll post it to you, and it should arrive within 10 working days.
How do I pay National Insurance as self-employed person?
As soon as you become self-employed, you should register with HMRC. You’ll need to fill out a self-assessment tax return each year to report your earnings and business-related spending.
From this self-assessment, HMRC will calculate how much tax you owe based on the amount of profit you make over the tax year – your National Insurance contributions are part of this tax.
The amount of National Insurance you owe will be part of the bill HMRC issues you. For those on ‘payment on account’, this will be split into two payments due by 31 July and 31 January.
- Find out more: self-employed tax return – read our guide to completing your tax return.
Submit your 2021-22 tax return with Which?
File your 2020-21 tax return with the Which? tax calculator. Tot up your tax bill, get tips on where to save and submit your return direct to HMRC with Which?.