Question 1

How is self-employed tax calculated in the UK?

Accepted Answer

Self-employed people pay income tax on profits above the personal allowance (£12,570 in 2026/27) at 20%, 40% or 45%. They also pay Class 2 NI (£3.45/week on profits above £6,725) and Class 4 NI (6% on profits £12,570–£50,270, 2% above). All paid via Self Assessment.

Question 2

What is the difference between Class 2 and Class 4 NI?

Accepted Answer

Class 2 NI is a flat weekly rate (£3.45/week) paid by self-employed people with profits above the small profits threshold. It counts toward your State Pension. Class 4 NI is profit-based: 6% on profits between £12,570 and £50,270, and 2% above £50,270. It does not directly build State Pension entitlement.

Self-employed tax calculator

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