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If you are self-employed, paying National Insurance Contributions (NICs) is important to keep your entitlement to the State Pension and other benefits. In the 2025/26 tax year, if your earnings are more than £12,570, you must pay Class 4 NICs. You will pay 6% on profits between £12,570 and £50,270, and 2% on any profits above that amount.
However, many self-employed individuals earn below these thresholds. That’s where voluntary Class 2 NICs come into play.
The Importance of Qualifying Years
Your entitlement to the full new State Pension depends on the number of qualifying years you accumulate during your working life. You need:
- 35 qualifying years for the full State Pension.
- At least 10 qualifying years to receive any State Pension at all.
Qualifying years can be built through employment, self-employment, or credited time (e.g., for receiving certain benefits or caring responsibilities).
Earning Thresholds and National Insurance Credits
For the 2025/26 tax year:
- If your profits are £12,570 or more, you pay Class 4 NICs and automatically gain a qualifying year.
- If profits fall between £6,845 and £12,569, you do not pay Class 4 National Insurance, but you receive a National Insurance credit, so a qualifying year is granted without any additional cost.
- If profits are below £6,845, you receive no automatic credit. This is where voluntary contributions matter.
Voluntary Class 2 vs Class 3 Contributions
To fill a gap in your NI record when profits are below the small profits threshold, you can choose to pay voluntary Class 2 NICs or Class 3 NICs.
- Class 2 NICs cost £3.50 per week or £182 per year.
- Class 3 NICs cost £17.75 per week or £923 per year.
Clearly, Class 2 is the more affordable option—but it’s only available to self-employed individuals.
When Is It Worth Paying Voluntary Class 2 NIC?
Before paying, ask yourself:
- Do I already have 35 qualifying years?
- If yes, you don’t need to contribute further for State Pension purposes.
- Will this contribution bring me closer to at least 10 qualifying years?
- If yes, and you’re likely to reach 10 years before retirement, it’s usually worthwhile.
- Can I build qualifying years in future through work or credits?
- If not, consider filling gaps now.
You can check your current NI record and forecast via the government’s official pension checking service.
How to Pay
Voluntary Class 2 NICs are typically paid through the Self-Assessment tax return. If you haven’t been automatically charged and you’re eligible, you may need to contact HMRC to arrange payment.
There is also a six-year time limit to fill in missing NI years, giving you some flexibility to plan your contributions strategically.
Practical Consideration
Paying just £182 to secure a qualifying year towards your State Pension is a cost-effective long-term investment, especially if you have gaps in your record. It’s a low-cost way to protect your future retirement income.
Voluntary Class 2 National Insurance can be a smart choice for self-employed individuals with low profits. It ensures your efforts count toward your future pension, all at a relatively minimal cost. If you have fewer than 35 qualifying years—or are unsure—taking a moment to review your NI record and consider voluntary payments could make a significant difference to your retirement.