National Insurance (NIC) is the UK's system of social security contributions that funds the state pension and certain benefits. It is separate from income tax. Self-employed sole traders pay Class 4 contributions on their trading profits, and historically a small flat-rate Class 2 charge, both collected through Self Assessment.
Class 4 NIC is charged at 6% on annual profits between the lower profits limit and the upper profits limit, then 2% on profits above the upper limit. This mirrors the two-tier structure so that very high earners contribute a smaller marginal percentage.
Example: a freelancer with GBP 60,000 profit pays 6% on the band up to the upper profits limit (around GBP 50,270) and 2% on the roughly GBP 9,730 above it. The 2% slice alone adds about GBP 195, on top of the main-rate contributions and any income tax due.
- Class 4 main rate: 6%
- Class 4 additional rate: 2%
- Collected via Self Assessment
See how it stacks with income tax, and compare social charges under Spain's autonomo or France's micro-entrepreneur systems.