Compact Services

  2010 Budget - National Insurance Contributions

For employees' NIC, see Employee Taxation.

Self-employed people pay:

  • weekly Class 2 contribution of £2.40, unless they claim exception for small earnings (below £5,075).Usually paid monthly by direct debit.
  • Class 4 NIC at 8% of taxable profits between £5,715 and £43,875. Profits over £43,875 will be charged at 1%. This is assessed and paid with the self-assessment income tax on profits.

Class 3 voluntary NIC may be paid at £12.05 per week by someone who is not in work but who wishes to maintain state pension rights.

Annual limits

Someone who is both employed and self-employed will pay Class 1, Class 2 and Class 4 NIC. It is possible to apply for deferment of Class 4 so that the Class 1 paid on earnings can be taken into account. Class 4 will then be charged through self-assessment at only 1%, and the overall balance or liability will be settled at a later date.