National Insurance is a system of contributions paid by both employed and self-employed people (trading as sole traders or partnerships) that qualifies them for certain state benefits and pensions such as the state pension and statutory maternity or paternity pay.

Employed and self-employed individuals pay different types of National Insurance contributions (NICs), which qualify them for different benefits. The amount of NICs paid by self-employed people varies according to how much profit they make. Some individuals (whether employed or self-employed) also choose to pay voluntary NICs, for example to protect their state pension if they have not otherwise made enough contributions.

NICs are paid to HM Revenue & Customs (HMRC), which tracks contribution records via National Insurance numbers.

Most self-employed people are required to pay flat-rate weekly Class 2 NICs (subject to certain exemptions), and some are also required to pay Class 4 NICs, depending on the level of their profits.

This factsheet provides an explanation of the National Insurance classes that are relevant for self-employed people, including anyone who chooses to make voluntary contributions, and covers who has to pay NICs, how and when. It also explains the various financial thresholds relating to the payment of NICs, how NICs are calculated, and the special rules that apply to people who have earnings from both employment and self-employment or who are running more than one business.