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If you work for your own self-employed business, then you may need to pay National Insurance on the profits that you earn. In this article we explain how National Insurance works for self-employed people, how much you need to pay, and when.

What is National Insurance (NI)?

How much is self-employed National Insurance?

How do I pay National Insurance (NI)?

What happens if I have gaps in my NI record?

National Insurance is a type of tax paid by employees, employers, and self-employed people. The National Insurance contributions that you make go towards your eligibility for some types of benefits and the state pension.

To make sure National Insurance Contributions are recorded correctly, each person has their own unique NI number.

Self-employed people pay National Insurance on their profits, so the amount of NI you pay depends on how much profit you make in a year.

There are different types of self-employed National Insurance, known as classes:

Annual Threshold
Annual Threshold
No National Insurance to pay on profits in this range, but you can make voluntary payments to fill any gaps in your NI record. £0 – £6,724 £0 – £6,724
Small Profits Threshold (SPT): You won’t pay NI on profits at or above this and below the Lower Profits Threshold (LPT), but you will accrue National Insurance credits. £6,725 £6,725
Lower Profits Threshold (LPT): Start paying Class 2 National Insurance once profits reach this threshold.

2023/24: £3.45 per week
2024/25: Abolished
£12,570 £12,570
Lower Profits Limit (LPL): Pay Class 4 National Insurance on profits above this threshold at a rate of:

2023/24: 9%
2024/25: 8%
£12,570 £12,570
Upper Profits Limit (UPL): Pay Class 4 NI at a slightly different rate on profits above this threshold.

2023/24: 2%
2024/25: 2%
£50,270 £50,270

Self-employed people pay National Insurance when they submit their Self Assessment tax return to report the profits and other income they receive in a tax year.

You’ll be given a tax calculation once you submit your return, and this will show the breakdown of different taxes that you owe. There are several options for paying your Self Assessment tax bill – just make sure you don’t miss the deadline!

Comprehensive tax return services

From only £24.50 per month

Learn more

National Insurance when you’re employed and self-employed

Some people work for an employer and run a business in their spare time, but the National Insurance you pay as an employee is different to the NI you pay for self-employment.

Your employer will normally collect any National Insurance you owe by deducting it from your wages, and then sending it on to HMRC along with their own contribution.

You’ll report any tax and National Insurance you’ve paid through your employer when you complete your Self Assessment tax return, but you won’t need to pay tax on the same money twice.

National Insurance if you run your own limited company

If you operate your own limited company, then you might decide to pay yourself a salary as a director. This means that you’re (sort of) both an employee and the employer, so most directors take a smaller salary at or below the threshold for paying National Insurance – otherwise you might end up paying two lots of NI!

Your remaining income can then be taken from the company in the form of dividends, which aren’t subject to National Insurance.

The National Insurance contributions you make go towards your State Pension and some types of benefits. Gaps in your NI record can affect your entitlement to these or how much State Pension you get.

You can check your National Insurance record online using your Personal Tax Account, and make voluntary contributions to fill any gaps.
Learn more about our online accountancy services for self-employed people like you. To talk to one of the team, call 020 3355 4047, request a free call back, or get an instant online quote.

About The Author

Elizabeth Hughes

A content writer specialising in business, finance, software, and beyond. I'm a wordsmith with a penchant for puns and making complex subjects accessible. Learn more about Elizabeth.

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