Tax and National Insurance when you're Self-Employed
Comprehensive guide on tax and national insurance for self-employed individuals by MoneyHelper.
MoneyHelper
National Insurance is a tax on earnings and self-employed profits. You normally start paying when you turn 16 and earn over a certain amount.
Your National Insurance contributions (NICs) go towards whether you qualify for benefits, such as a state pension or jobseekers allowance.
When you’re employed, contributions are normally calculated and taxed at source by your employer via the PAYE (Pay as you earn) scheme, but when you’re self-employed, you’ll need to be paying National Insurance yourself.
If you’re self-employed, you’ll pay Class 2 and/or Class 4 National Insurance, depending your trading profits.
If you’re a company director of a limited company - you’re not technically self-employed, so will be paying Class 1 National Insurance as an employee of your own company, but you’ll also be paying Employers contributions, which are increasing from 13.8% to 15% from April 2025.
If you’re working both as self-employed and as an employee of others (i.e. via umbrella companies or inside IR35 contracts), you’ll need to calculate your various deductions to make the correct payments.
Your National Insurance contributions are calculated based on your Self Assessment tax return - and are paid at the same time as your Income Tax payments.
Tax can be complex, so we generally recommend finding an accountant to help you - but you should still aim to understand what tax you are paying, how much you should be putting aside, and make sure you pay your tax on time.
Many freelancers start self-employment without being aware of what they need to put aside for tax and national insurance. Don’t make that mistake. Read the guides linked below or speak to an accountant for support.