How to Pay Self-Employed National Insurance, and What Happens if You Don’t?

Self-employed people must pay National Insurance contributions. But the good news is that the rate you’ll pay is lower than the rate employees pay.

This is your essential guide to National Insurance for the self-employed. We’ll explore how much you have to pay, how to pay it, and what happens if you don’t pay.

The self employed pay National Insurance but at a lower rate than the employed

How Much National Insurance Do Self-Employed People Pay?

The type of National Insurance you pay depends on how much you earn. Most self-employed people pay Class 2 National Insurance. But if you earn over a certain amount in a year, you may have to make Class 4 National Insurance contributions too.

What is Class 2 National Insurance?

You pay Class 2 National Insurance if you make between £6,515 and £9,568 in the space of a year. You’ll pay a flat rate of £3.05 a week. We have a full guide to Class 2 National Insurance.

What is Class 4 National Insurance?

You’ll also pay Class 4 National Insurance if you make more than £9,568 in the space of a year. There’s a different rate depending on how much you earn. It’s 9% on profits between £9,569 and £50,270, and 2% on profits over £50,270. You can read our full guide to Class 4 National Insurance.

How Do I Pay National Insurance as a Freelancer?

HMRC will calculate the National Insurance you owe when you submit your self-assessment tax return. So there’s no need to worry about choosing Class 2 or Class 4, and no need to worry about working out how much you owe. HMRC will do it all for you.

HMRC will then add your National Insurance contributions to your overall tax bill. So you’ll pay it at the same time you pay the rest of your tax.

What Happens If I Don’t Pay Any National Insurance as a Self-Employed Person?

As HMRC calculates your National Insurance contributions, the only way to avoid paying them is to avoid paying your tax bill. But this is against the law and there are severe penalties for anyone who purposefully avoids tax. So in short, if you’re self-employed it’s hard to avoid making National Insurance payments!

Self-Employed Exempt from National Insurance

But that said, some self-employed people are exempt from National Insurance contributions, even as part of a self-assessment tax return. These include:

  • Exam invigilators and moderators.
  • Anyone who runs a business that involves land or property.
  • Religious ministers who don’t receive salaries or stipends.
  • Investors who do not receive fees or commissions.

In any case, if you don’t pay National Insurance through self-assessment, you can instead make a voluntary contribution. You can read a full guide to voluntary National Insurance contributions.

National Insurance for the Self-Employed is Nothing to Worry About

You shouldn’t have any problems with National Insurance contributions so long as you take all the necessary steps to register your business and keep good records.

But at the same time, it’s a good idea to get insurance as a self-employed freelancer or contractor. This can provide an essential safety net for many of the problems that self-employed workers face, from unpaid invoices to tax disputes.

We offer specialist insurance policies for freelancers and contractors with cover starting at 35p a day. Head here to learn more.

If you have any questions or would like to discuss your options please contact our Tapoly team at info@tapoly.com, call our helpline on +44(0)2078 460 108 ortry our chat on our website.

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