Ainsworth Accountants: Accounts, Tax and Business Advisors.

Class 4 National Insurance

Class 4 National Insurance Guide

What is Class 4 National Insurance ?

If you are Self-Employed you normally have to pay Class 4 National Insurance contributions if your profits are over a certain amount.

However there are circumstances when you may be exempt from paying, or pay a reduced amount, as described further down the page.

We will help you with your Class 4 NI as part of the Self Assessment process.

Limited Companies do not pay Class 4 NI. Please visit our webpage to help you decide whether to trade as a Sole Trader or Limited Company.

Class 4 NI Rates – How much is payable ?

The amount of Class 4 NI contributions you have to pay for any tax year is based on your profits for that year.

For the tax year 2021/22 (6/4/21 to 5/4/22):
• 9% on business profit between £9,568 and £50,270
• 2% on business profit over £50,270.

This is in addition to Income Tax.

How is Class 4 NI Paid ?

Class 4 NI contributions are calculated as part of Self Assessment tax return and are normally paid at the same time as Income Tax.

If you have more than one business, special rules apply for calculating adjustments to profits on which you pay Class 4 National Insurance contributions.

Class 4 NI can also be deferred if you are also in employment.

Class 4 NI Deferment

Class 4 NI contributions can be deferred for certain people by completing Form CA72B. This can typically happen if you have a full time job as well as being self-employed. In these circumstances it is possible that you may only need to pay 2% instead of the 9% in the bands above.

Exceptions from Class 4 National Insurance contributions

There are exceptions from the rule in the case of the people who have to pay Class 4 National Insurance contributions, including:
• under 16 years old
• those who are still working in the tax year after the tax year in which you reach State Pension.

Government and HMRC Webpages

HMRC: Class 4 National Insurance contributions

Gov.UK: National Insurance Overview

Gov.UK: Self-employed National Insurance rates

HMRC: Self-employed tax and National Insurance

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