4 min read

How much National Insurance will I pay as a sole trader?

Sole traders must register to pay self-employed National Insurance contributions with HM Revenue and Customs (HMRC). This article gives you an overview of National Insurance for the self-employed and demonstrates how much National Insurance will be due by a sole trader for 2024/25.

What is National Insurance?

National Insurance is a system of contributions paid to qualify for certain benefits including the State Pension.

As a sole trader you will pay Class 4 National Insurance if you’re:

  • 16 or over
  • self-employed and making a profit of £12,570 or more a year (for 2024/25)

A sole trader may sometimes pay Class 2 National Insurance:

  • these contributions are treated as having been paid if you earn more than £6,725
  • if profits are less than £6,725 a year, you can choose to pay Class 2 contributions

 

You need a National Insurance number before you can start paying National Insurance contributions. 

 

Tax doesn’t need to be taxing

To see this piece of interactive content, please visit our main site below.

Display Full Site

How much National Insurance will I pay?

For 2024/25, the Class 2 rate is £3.45 per week.

For 2024/25 Class 4 national insurance is payable where annual profits exceed £12,570. Class 4 national insurance is payable on profits exceeding £12,570 at a rate of 6% until profits reach £50,270. Any profits in excess of £50,270 attract Class 4 National Insurance at a reduced rate of 2%.

Here are two examples showing how Class 2 and Class 4 contributions are calculated depending on the annual profits.

Rakesh buys and sells things online

He has self employed profits in 2024/25 of £19,000. Class 4 will also be due as profits are above £12,570. The part of the profits that fall between £12,570 and £19,000 will attract Class 4 national insurance at 6%. His profits are more than £6,725 a year so his Class 2 contributions are treated as having been paid. 

Sandra is a self employed electrician

Sandra has annual profits for 2024/25 of £51,000. Class 4 will also be due as profits are above £12,570. The part of the profits that fall between £12,750 and £50,270 will attract Class 4 national insurance at 6%. The remaining amount of profit will be at 2%. Her profits are more than £6,725 a year so her Class 2 contributions are treated as having been paid. 
Rakesh buys and sells things online

He has self employed profits in 2024/25 of £19,000. Class 4 will also be due as profits are above £12,570. The part of the profits that fall between £12,570 and £19,000 will attract Class 4 national insurance at 6%. His profits are more than £6,725 a year so his Class 2 contributions are treated as having been paid. 

Sandra is a self employed electrician

Sandra has annual profits for 2024/25 of £51,000. Class 4 will also be due as profits are above £12,570. The part of the profits that fall between £12,750 and £50,270 will attract Class 4 national insurance at 6%. The remaining amount of profit will be at 2%. Her profits are more than £6,725 a year so her Class 2 contributions are treated as having been paid. 

How and when will I pay National Insurance?

Both Class 2 and Class 4 National Insurance Contributions are calculated as part of the self-assessment process. Many self-employed individuals are under what is known as the payments on account regime. 

 

 

Self employed tax and national insurance calculator

To see this piece of interactive content, please visit our main site below.

Display Full Site

Should I consider paying voluntary contributions?

You may choose to make voluntary Class 3 National Insurance contributions if, for example, you have gaps in your National Insurance record. Voluntary contributions will give you credit for that payment period towards certain state entitlements such as a credit towards the new flat-rate state pension.

The Class 3 contribution rates are a lot higher than Class 2 at £17.45 per week.

If you want to review your national insurance credits to date, you can contact HM Revenue and Customs (HMRC). 

It is important to be aware of the number of ‘credit years’ to be eligible for the full amount of state pension:

  • 30 years if you reach State Pension age on or after 6 April 2010 but before 6 April 2016, or
  • 35 years if you reach State Pension age on or after 6 April 2016
  • this is men born on or after April 6th 1951 and women born on or after April 6th 1953

Before making a decision on paying voluntary contributions we recommend you speak to an experienced professional for more advice.

You can check the details of your National Insurance record here.