For a 2025/26 sole trader return, Class 4 generally applies at 6% between £12,570 and £50,270 of profits and 2% above that. Class 2 can be treated as paid without a charge when the year’s conditions are met. Check the historic rates and your contribution position.
Class 4 is based on taxable trading profits
For 2025/26, Class 4 is generally 6% on profits over £12,570 up to £50,270, and 2% above £50,270. Other rules can affect the calculation, including age and interaction with employment contributions.
Turnover and profit are different. A trader with £40,000 of sales does not normally calculate Class 4 on the full £40,000 if allowable business costs reduce the taxable profit.
Class 2 does not always mean a separate charge
For 2025/26, qualifying self-employed profits of £6,845 or more generally mean Class 2 is treated as paid to protect the National Insurance record, without a Class 2 payment. Below that level, voluntary Class 2 may be available at £3.50 a week, subject to the relevant conditions.
Do not assume that a voluntary payment is beneficial merely because the option appears. Check your contribution record, existing credits and eligibility before deciding whether to pay. Equally, do not assume that low profit automatically gives you a qualifying year.
Tell the accountant about employment too
If you were employed and self-employed in the same year, provide your P60 and trading records. Employment contributions and self-employed contributions interact under rules that a simple single-income estimate may not capture.
Ordinary residential rental income is not automatically subject to the same National Insurance treatment as a sole trade. Explain what you actually do rather than describing every income source as self-employment.
Check the components before paying
Ask how much of the bill is Income Tax, Class 4 and any voluntary Class 2. Payments on account can also make the amount due differ from the year's liability.
TaxSimba can prepare the return using the relevant year and your full income information. Keep National Insurance questions separate from the monthly fee paid for an MTD accounting service; one is a government liability and the other pays for professional work.
Use profit and the correct contribution year
Illustrative preparation example.
Keep the tax-adjusted trade profit calculation and any information relevant to contribution status. Bank drawings, turnover and profit are different amounts. Before using a National Insurance rate, check that it belongs to the return year being prepared.
Check: Which profit figure and tax-year rules support the contribution calculation?
| Check | Practical action |
|---|---|
| Are the profit figures tax-adjusted? | Separate gross sales, allowable costs and any further adjustments. |
| Is the calculation using 2025/26 rules? | Do not copy current-year Class 2 figures into an earlier return. |
| Does other employment or age affect the position? | Supply the full contribution context and check the NI record where relevant. |
Is every Class 2 entry an extra weekly bill?
No. Depending on the year's profit and conditions, Class 2 may be treated as paid. Check the relevant year and eligibility.
Should I always pay voluntary contributions for a low-profit year?
Check the contribution record, existing credits and eligibility first. A voluntary payment is not automatically useful in every case.
Download a checklist for this guide
- Prepare tax-adjusted trading profit.
- Confirm the tax year used for NI figures.
- Gather employment contribution records.
- Check age and other relevant circumstances.
- Review the NI record before any voluntary-payment decision.