Class 2 NIC for the Self-Employed Explained

If you’re self-employed in the UK whether as a freelancer, sole trader, or contractor you’ve probably come across Class 2 National Insurance Contributions (NICs). But what exactly are they, how much do you pay, and why are they so important?

This post explains what Class 2 NIC means for self-employed people, what’s changing in 2025/26, and how to stay compliant with HMRC.

What Are Class 2 NICs?

Class 2 National Insurance Contributions (NICs) are weekly payments that self-employed people in the UK pay to build up entitlement to certain state benefits.

If you’re self-employed, paying Class 2 NICs helps you qualify for:

• The State Pension your contributions count towards your National Insurance record, which affects how much State Pension you’ll receive when you retire.
• Maternity Allowance financial support for self-employed mothers who meet certain conditions.
• Employment and Support Allowance (ESA) which may be available if you’re unable to work due to illness or disability.

Unlike Class 4 NICs  which are calculated as a percentage of your profits (and work more like an extra tax) Class 2 NICs are flat-rate payments, usually paid through your Self Assessment tax return.

Key point: Keeping up with your Class 2 NICs helps you protect your eligibility for basic state benefits. If your profits are below the Small Profits Threshold, you can still pay voluntarily to maintain your National Insurance record.

For the latest rates and thresholds, check GOV.UK: National Insurance for Self-Employed or speak to an accountant for advice on whether you should pay voluntarily.

Who Pays Class 2 NIC?

You must pay Class 2 National Insurance Contributions if you’re:

• Self-employed for example, as a sole trader, freelancer, or contractor.
• Earning profits above the Small Profits Threshold for the tax year (the threshold can change each year, so it’s important to check the current limit on UK).

If your profits are below the Small Profits Threshold, you don’t have to pay Class 2 NICs, but you may choose to pay them voluntarily to protect your entitlement to certain state benefits, such as the State Pension.

Tip: Many self-employed people find it worthwhile to pay Class 2 NICs voluntarily if they’re under the threshold, so they don’t end up with gaps in their National Insurance record.

For more details on whether you need to pay, see National Insurance for the self-employed or speak with an accountant to check what’s best for your situation.

Class 2 NIC Rates and Thresholds (2025/26)

For the tax year 6 April 2025 to 5 April 2026:

This means:

• If your profits are £6,725 or more, you must pay Class 2 NIC.
• If your profits are below £6,725, you don’t have to pay but you can voluntarily pay to protect your National Insurance record.

GOV.UK – National Insurance for self-employed

Why Should You Pay Class 2 NIC If Under the Threshold?

If your self-employed profits are below the Small Profits Threshold, you don’t have to pay Class 2 National Insurance Contributions (NICs) but in many cases, it’s wise to pay them voluntarily.

Here’s why:

Your Class 2 NIC payments help you build up entitlement to:

• The State Pension you usually need at least 10 qualifying years of contributions to get any State Pension, and 35 years for the full amount.
• Maternity Allowance financial support for self-employed mothers who meet the contribution conditions.
• Contributions-based Employment and Support Allowance (ESA) if you can’t work due to illness or disability.

Key point: If you don’t pay Class 2 NIC and you don’t build enough qualifying years through other employment, you could miss out on part of your State Pension later on.

If your profits are under the Small Profits Threshold but you want to protect your record, you can opt in to pay Class 2 NIC voluntarily when you file your Self Assessment tax return each year.

For more information, see GOV.UK: National Insurance if you’re self-employed or ask your accountant for advice.