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Taxation (UK) · National insurance contributions for employed and self-employed persons

How to Calculate Class 4 NIC for the Self-Employed

Updated 11 October 2026 · Fact-checked

Class 4 NIC is a national insurance charge on the taxable trading profits of sole traders and partners. You pay nothing on profits up to £12,570, 6% on profits from £12,571 to £50,270, and 2% on profits above £50,270. Work out each person's own profits, split them across the bands, and add the results.

Understand Class 4 NIC for the Self-Employed

Employees pay national insurance through payroll. Self-employed people pay it on their trading profits instead. Class 4 NIC is the main charge. It applies to sole traders and to each partner in a partnership.

Class 4 works like income tax bands, but it has its own limits. The lower profits limit is £12,570. The upper profits limit is £50,270. Profits up to the lower limit are charged at nil. Profits between the two limits are charged at the main rate of 6%. Profits above the upper limit are charged at the additional rate of 2%.

The charge is on taxable trading profits. That means the adjusted profit for the tax year after capital allowances, and after any trading losses relieved against those profits. It is not affected by the personal allowance. A person with a large personal allowance still gets only the Class 4 nil band shown above. Other income, such as dividends or interest, is not included.

Partners are taxed as individuals. Each partner's Class 4 is worked out on that partner's own share of the partnership profit for the tax year. You never calculate Class 4 on the total partnership profit.

Class 4 is collected through self-assessment together with income tax. It is not deductible when you compute taxable income. Class 2 NIC is a separate charge, so keep the two apart in your answer.

Key rules to remember

Class 4 lower profits limit
Profits up to £12,570 × 0% = nil
No Class 4 is due on this slice.
Class 4 main rate band
(Lower of profits and £50,270 − £12,570) × 6%
The band is £37,700 wide. The maximum main rate charge is £37,700 × 6% = £2,262.
Class 4 additional rate
(Profits − £50,270) × 2%, if profits exceed £50,270
Only the excess over the upper profits limit is charged at 2%.
Total Class 4 NIC
Main rate charge + additional rate charge
Calculate separately for each sole trader or partner.

How to solve Class 4 NIC for the Self-Employed questions

Use this method for any Class 4 question, whether the person is a sole trader or a partner.

  1. 1Find the person's taxable trading profits for the tax year. For a partner, use only their own share of the profit.
  2. 2Check for adjustments the question gives, such as capital allowances or trading loss relief, and make sure the profit figure is after them.
  3. 3If profits are £12,570 or less, Class 4 is nil. Stop.
  4. 4Charge 6% on profits from £12,570 up to the lower of the profits and £50,270.
  5. 5If profits exceed £50,270, charge 2% on the excess.
  6. 6Add the two charges to get total Class 4 NIC.
  7. 7Show the working in bands with the rate beside each line, and state whether the amount is added to the income tax payable.

Quickest way: Band-slice shortcut

When to use it: Use this for objective test questions and for quick checks in constructed response answers.

  1. Below £50,270: subtract £12,570 and multiply by 6%.
  2. Above £50,270: start with the fixed figure of £2,262, then add 2% of the profits over £50,270.
  3. Sense check: the answer should never be less than £2,262 if profits exceed £50,270, and should be nil if profits are £12,570 or less.
  4. Check you used the right person's profit, especially for partners.

Common mistakes in Class 4 NIC for the Self-Employed

  • Charging 6% on all profits above £12,570 without applying the 2% rate above £50,270.

    Students forget that the band structure has a second limit.

    Fix: Always test whether profits exceed £50,270. If they do, split the profit into the 6% slice and the 2% slice.

  • Calculating Class 4 on the total partnership profit.

    Students take the first profit figure in the question.

    Fix: Divide the profit using the profit-sharing arrangement first. Calculate Class 4 for each partner separately on their own share.

  • Deducting the personal allowance before calculating Class 4.

    Students confuse Class 4 with income tax.

    Fix: Class 4 uses its own limits of £12,570 and £50,270. The personal allowance plays no part in it.

  • Using profits before capital allowances or before loss relief.

    Students use the accounting or adjusted profit rather than the taxable trading profit.

    Fix: Deduct capital allowances and any trading losses relieved against the profits to reach the taxable trading profit.

  • Treating the 6% band as £50,270 wide.

    Students apply 6% to the upper limit itself rather than the slice above £12,570.

    Fix: The 6% slice is £37,700 wide, so the maximum main rate charge is £2,262.

  • Deducting Class 4 NIC when computing taxable income.

    Students treat it like an allowable business expense.

    Fix: Class 4 is not an allowable deduction. It is a separate liability.

Worked examples

Example 1

Anna is a sole trader. Her taxable trading profits for the tax year are £40,000. Calculate her Class 4 NIC.

Show the solution
  1. Profits are above the lower profits limit of £12,570 and below the upper profits limit of £50,270.
  2. Profits in the main rate band: £40,000 − £12,570 = £27,430.
  3. Class 4 at 6%: £27,430 × 6% = £1,645.80.
  4. No profits exceed £50,270, so there is no 2% charge.

Answer: Anna's Class 4 NIC is £1,645.80.

Example 2

Ben and Cara are in partnership. Ben's share of the taxable trading profit for the tax year is £62,000. Calculate Ben's Class 4 NIC.

Show the solution
  1. Use only Ben's own share: £62,000.
  2. Main rate band: £50,270 − £12,570 = £37,700 at 6%, which is £2,262.
  3. Profits above the upper limit: £62,000 − £50,270 = £11,730.
  4. Additional rate: £11,730 × 2% = £234.60.
  5. Total: £2,262 + £234.60 = £2,496.60.

Answer: Ben's Class 4 NIC is £2,496.60.

Exam tips

  • In an objective test, find which band the profits fall in before calculating. This avoids using the wrong rate.
  • In a partnership question, allocate profits to each partner first and state clearly whose Class 4 you are computing.
  • Lay out the answer in two lines, the 6% slice and the 2% slice, so you earn method marks even if the arithmetic slips.
  • Use the limits given in the tax rates and allowances provided in the exam. Do not rely on memory if the figures are printed.
  • Do not mix up Class 4 with Class 2 or Class 1. Read which class the question asks for.

Practice questions from National insurance contributions for employed and self-employed persons

Class 4 NIC for the Self-Employed in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Class 4 NIC for the Self-Employed: frequently asked questions

What are the Class 4 NIC rates for TX-UK?

There is no charge on profits up to £12,570. The main rate is 6% on profits from £12,571 to £50,270. The additional rate is 2% on profits above £50,270.

Is Class 4 NIC calculated on each partner separately?

Yes. Each partner is charged on their own share of the partnership's taxable trading profit for the tax year. You never apply the limits to the total partnership profit.

Does the personal allowance reduce Class 4 NIC?

No. Class 4 has its own lower and upper profits limits. The personal allowance affects income tax only.

Is Class 4 NIC an allowable deduction for income tax?

No. It is a separate charge on profits and is not deducted when working out taxable income.