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What is Class 4 NIC?

Class 2 and Class 4 national insurance contributions (NIC) are paid by self-employed individuals and partners in a partnership on their profits arising within the UK. This guidance note considers Class 4 contributions. For Class 2 contributions which are to be abolished from 6 April 2024, see the Class 2 national insurance contributions guidance note. For relevant types of NIC in relation to employed people, see the Overview of NIC Classes, rates and thresholds guidance note.

Class 4 contributions are essentially a profit-based tax; there is no attached state benefit entitlement. A Class 4 NIC calculation depends on the level of profits in a tax year, the individual is only liable to pay Class 4 NIC if their profits are over the lower profits limit and there is a lower rate if profits are above the upper profits limit, see details below.

‘Profits’ for Class 4 purposes includes all profits from a trade, profession or vocation conducted in the UK and are chargeable under ITTOIA 2005, ss 5–23. The calculation