Owner-Managed Businesses

Class 4 national insurance contributions

Produced by Tolley
  • 23 Jun 2022 10:23

The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Class 4 national insurance contributions
  • Exemptions
  • Recategorised earners
  • Salaried members of limited liability partnerships (LLPs)
  • Collection of Class 4 NIC
  • Treatment of trading losses
  • Loan to invest in a partnership
  • Claiming refunds

Class 4 national insurance contributions

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, see the Class 2 national insurance contributions guidance note.

Class 4 contributions are essentially a profit-based tax; there is no attached benefit entitlement. The contributions are calculated according to the level of profits in a tax year. ‘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 523. The calculation of profits for Class 4 purposes is made on the same basis as profits for income tax purposes.

For the 2022/23 tax year, Class 4 NIC is payable at 10.25% on profits between £11,908 (as announced at Spring Statement 2022 - see the Draft NIC (Increase of Thresholds) Bill ) and £50,270 with an uncapped 3.25% payable on profits above £50,270.For the 2021/22 tax year, Class 4 NIC was payable at 9% on profits between £9,568 and £50,270 with an uncapped 2% payable on profits above £50,270. See Example 1.

In 2023/24, the NIC rates will revert back to 9% / 2% with an additional 1.25% health and social care levy being introduced. Unlike NIC, the social and health care levy will also apply to those over state pension age. For more details,

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