National Insurance Contributions
For employees' NIC, see Employee Taxation page.
Self-employed people pay:
- weekly Class 2 contribution of £2.70pw, unless they claim exception for small earnings (below £5,725). Can be paid monthly or six-monthly by direct debit
- Class 4 NIC at 9% of taxable profits between £7,775 and £41,450. Profits over £41,450 are charged at 2%. Assessed and paid with the self-assessment income tax on profits
Class 3 voluntary NIC may be paid at £13.55pw by anyone not in work but who wants to maintain state pension rights.
Someone who is both employed and self-employed will pay Class 1, Class 2 and Class 4 NIC. It is possible to apply for deferment of Class 4 so that the Class 1 paid on earnings can be taken into account. Class 4 will then be charged through self-assessment at only 2%, and the overall balance of liability will be settled at a later date.