Class 2 and Class 4 for sole traders
Who this guide is for: For sole traders reading a Self Assessment bill and wondering what Class 2 and Class 4 each do.
National Insurance (NI) for sole traders is mainly handled through Self Assessment as Class 2 and Class 4 — not Class 1 PAYE, which applies to employees.
| Aspect | Class 2 | Class 4 |
|---|---|---|
| Basis | Threshold / treated-as-paid or voluntary weeks | Taxable trading profits |
| Key thresholds | Small Profits Threshold (SPT — profits at or above this level can qualify for treated-as-paid Class 2) £7,105.00 | Lower profits limit (LPL — Class 4 starts here) £12,570.00 · Upper profits limit (UPL — additional Class 4 rate starts here) £50,270.00 |
| Cash amount due (typical) | £0 when treated as paid; voluntary rate may apply below the Small Profits Threshold | 6% then 2% |
| Contribution-record effect | Can secure a qualifying year when treated as paid or paid voluntarily | Does not generally replace Class 2-style State Pension credits |
Historical versus current treatment
From 2024/25: compulsory Class 2 was removed for many sole traders. Profits at or above the Small Profits Threshold are often treated as paid with £0 Class 2 due. Below that threshold, voluntary Class 2 may still be available.
Historical years (example 2023/24): compulsory Class 2 could create a cash charge once profits reached the payment threshold. Earlier tax years in Sorvuna's calculators still follow that older regime.
Worked example
£30,000 taxable trading profits
Tax year 2026/27 · England · no other income modelled here.
| Taxable trading profits | £30,000.00 |
|---|---|
| Class 4 National Insurance (key figure) | £1,045.80 |
| Class 2 cash due | £0.00 |
Class 2 treated as paid — £0 due (contribution record protected under the current rules).
Class 4 bands shown in the calculator NI breakdown under the same inputs.
Open the Self-Employed Tax Calculator's National Insurance breakdown Use the Self-Employed Tax Calculator
Class 4 feeds into payments on account calculations when Self Assessment instalments apply.