Gerald Charles & Co Accountants


What are National Insurance Contributions?

Most people who work are liable to pay national insurance contributions unless they come into any of the groups excepted from liability to pay.

There are six classes of contributions in all, and the class you pay depends on whether you are an employee, self employed, non employed or an employer. Depending on your status you may have to pay more than one class of contribution at the same time.

Self employed persons are liable to pay two classes of contributions:

  • Class 2 insurance contributions, (soon to be abolished)


  • Class 4 insurance contributions.

Class 2 National Insurance Contributions

Class 2 contributions are a flat rate payment. The rate for 2024/2025 is £179.40 per year

Unless you have applied for and been granted a small earnings exception certificate or are a married woman or widow with reduced liability, you must pay class 2 contributions in respect of each week including holiday periods, if you are:

  • normally self employed and
  • aged 16 or over and
  • under pension age.

Class 2 contributions are paid together with class 4 contributions and any tax due.

Class 4 National Insurance Contributions

If your profits are over a certain limit you may have to pay class 4 contributions as well as class 2 contributions.

Class 4 contributions are based on annual profits and are calculated at two rates. The rates for 2024/25 are 6% between a lower and upper profit level and 2% for profits above the upper profit level. The levels are set each year by the government in the budget. For 2024/25 the levels are:

  • lower profit level – £12,570
  • upper profit level – £50,270

Class 4 contributions are normally self assessed in the same way as tax, and collected by the HM Revenue & Customs together with any Taxes due.

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