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Taxes, Taxes, Taxes: A Guide On What You Need To Know About Paying Self-Employed National Insurance

Home » Tradesman Insights » Taxes, Taxes, Taxes: A Guide On What You Need To Know About Paying Self-Employed National Insurance

January 31st has been and gone, our tax returns are in for another year, and we can all breathe a sigh of relief, safe in the knowledge that there’s nothing left to think about on that front.

Or is there?

Whilst many self-employed tradesmen are all too familiar with the process of filling in a self-assessment and making sure we pay our tax, not everyone is up to speed on National Insurance (NI).

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Worry not, dear reader. Today, we’ll look at how much National Insurance you need to pay as a self-employed person, and how you actually make those payments.

self-employed national insurance

Paying national insurance as a self-employed tradesman

If you’ve ever worked for an employer before, you’ll know that NI contributions are taken directly out of your gross pay. Being self-employed, that obviously isn’t the case, but making NI payments isn’t half as complicated as it might seem.

For the most part, you’ll pay two types of contributions: Class 2 and Class 4, but only in certain conditions. You’ll pay Class 2 National Insurance contributions if your profits are at least £6,025, and Class 4 if they’re £8,164 or over.

self-employed national insurance

Who is exempt from paying national insurance contributions?

With all that being said, there are a few reasons why you may be exempt from making NI payments:

  • If you’re under 16
  • If you’re over retirement age
  • If you’re a married woman and you entered into the Reduced Rate scheme before April 1977.

There are other rules regarding exemptions for people in other professions, but for self-employed contractors, these are the only real exemptions we need concern ourselves with.

self-employed national insurance

Class 2 NI contributions ending in 2019

So far, we’ve talked a lot about Class 2 National Insurance. But wait, – didn’t you hear something on the news about those payments ending for self-employed people?

Yes, you did.

The UK government originally announced that it was abolishing Class 2 contributions from April 6th, 2018. This has now been pushed back a year, so you’ll still pay Class 2 until April 2019.

self-employed national insurance

How much are national insurance rates?

Whilst Class 2 is still around, it remains at a set rate of just £2.85 a week.

Meanwhile, Class 4 NI contributions are charged at a rate of 9% of profits between £8,164 and £45,000, and 2% on profits over £45,000.

self-employed national insurance

How do I actually pay national insurance?

For the most part, the easiest way to make NI contributions is through your self-assessment tax return, so there’s no need to worry about setting up a separate payment. However, if at any point you chose not to pay through your tax return, or if you had a year in which you didn’t make enough profit to be eligible to pay NI, you might want to consider making voluntary payments.

You can find out if you might benefit from paying voluntary contributions using the government’s own National Insurance checker tool.

Remember, the amount of National Insurance you pay is directly linked to the amount you’ll receive for your state pension way down the line, so it’s often worth looking into.

Do you have any more questions about National Insurance payments? Unsure what Class 2 contributions being abolished means for you? Let us know in the comments below, or get in touch via Facebook and Twitter and we’ll do our best to answer your questions here on our blog.

Tradesman Saver also provides insurance for tradesmen covering a wide variety of professions, as well as insurance for self-employed professionals. For further information, please see our who we cover page.

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