For the 2026/27 tax year, self-employed individuals pay Class 4 National Insurance Contributions (NICs) based on their annual taxable profits. The amount you pay to HM Revenue & Customs (HMRC) is calculated using a two-tier rate structure based on two key thresholds: the Lower Profits Limit (LPL) and the Upper Profits Limit (UPL).
Under section 15 of the Social Security Contributions and Benefits Act 1992, Class 4 NICs are payable on all profits immediately derived from the carrying on or exercise of one or more trades, professions, or vocations chargeable to income tax.
The 2026/27 Class 4 NIC Rates and Thresholds
| Threshold / Limit | 2026/27 Amount | Class 4 NIC Rate |
|---|---|---|
| Below the Lower Profits Limit (LPL) | Profits up to £12,570 | 0% |
| Main Rate Band | Profits between £12,570 and £50,270 | 6% |
| Additional Rate Band (Excess Profits) | Profits above £50,270 | 2% |
These rates reflect the structural reductions to self-employed National Insurance introduced in recent years.
How to Calculate Your Class 4 Liability
HMRC assesses your Class 4 National Insurance liability annually via your Self Assessment tax return. The calculation follows a strict statutory method, separating your profits into the two bands.
“From 6 April 2024… Step 1: Multiply the amount of profits between the Lower Profits Limit and the Upper Profits Limit by the main Class 4 NICs percentage rate. Step 2: Multiply the amount of profits that exceed the Upper Profits Limit by the additional Class 4 NICs percentage rate. Step 3: Add together the results of steps 1 and 2.”
Example Calculation
If a self-employed professional generates £60,000 in taxable trading profits during the 2026/27 tax year, the calculation operates as follows:
- Test the Main Rate Band: The profits between the LPL (£12,570) and UPL (£50,270) total £37,700.
- £37,700 × 6% = £2,262.00
- Test the Additional Rate Band: The profits exceeding the UPL (£50,270) total £9,730.
- £9,730 × 2% = £194.60
- Aggregate the Liability: Add Step 1 and Step 2.
- £2,262.00 + £194.60 = £2,456.60 total Class 4 NICs payable for the year.
What about Class 2 National Insurance?
Historically, self-employed earners paid a flat-rate Class 2 National Insurance alongside Class 4. However, the mandatory payment of Class 2 NICs has been abolished for those with profits above a certain level.
For the 2026/27 tax year, the interplay between your profits and Class 2 operates under the Small Profits Threshold (SPT), which is set at £7,105.
- Profits of £7,105 or more: You do not have to pay Class 2 contributions. HMRC treats your Class 2 NICs as having been paid automatically, ensuring your National Insurance record (for the State Pension and other benefits) is protected.
- Profits below £7,105: You are not required to pay any National Insurance, but you may choose to make voluntary Class 2 payments at a rate of £3.65 per week to preserve your qualifying years for the State Pension.
Consequently, a self-employed earner with profits above £12,570 will face a Class 4 liability (calculated above) but a £nil Class 2 liability, while still receiving the state benefit protections of the National Insurance system.
Exceptions for Specific Roles
Most self-employed individuals report and pay these amounts concurrently with their income tax via Self Assessment. However, special rules apply to certain roles. For example, if you operate as an examiner, moderator, invigilator, or set exam questions, you cannot pay your Class 4 NICs through standard Self Assessment. Instead, you are liable for “Special Class 4 National Insurance” and must arrange payment directly with the National Insurance office.
For completeness, consider reviewing the interplay between Class 4 NICs and any concurrent employment (Class 1 NICs), as an annual maximum contribution liability applies where a taxpayer is both employed and self-employed during the same tax year.
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