For the 2026/27 UK tax year, a self-employed individual has trading profits of £60,000. Under HMRC's Class 4 National Insurance rules, how is their Class 4 liability calculated?
- Class 4 National Insurance is charged at a single flat rate of 6% on the entire £60,000 of profits
- Class 4 National Insurance is charged at 9% on profits between the lower profits limit and the upper profits limit, and at 2% above that
- Class 4 National Insurance does not apply at all to profits above the upper profits limit of £50,270, so only the profit up to that limit is charged
- Class 4 National Insurance is charged at 6% on profits between £12,570 and £50,270, and at 2% on the remaining profits above £50,270
Why D? And why not the others?
Correct answer: D. Class 4 National Insurance is charged at 6% on profits between £12,570 and £50,270, and at 2% on the remaining profits above £50,270
For 2026/27, Class 4 National Insurance for the self-employed charges 6% on profits between the lower profits limit of £12,570 and the upper profits limit of £50,270, and 2% on any profit above £50,270, so on £60,000 of profits the band from £12,570 to £50,270 is charged at 6% and the remaining £9,730 above £50,270 is charged at 2%, matching the correct option exactly. The option applying a flat 6% to the whole £60,000 is wrong because it ignores that profit below £12,570 is not charged at all and profit above £50,270 drops to the lower 2% rate rather than staying at 6%. The option citing a 9% main rate is wrong because 9% was an earlier rate that has since been reduced to 6% for the main Class 4 band. The option claiming no charge above the upper profits limit is wrong because profit above that limit is still charged, just at the reduced 2% rate rather than being exempt.
Source: GOV.UK: Self-employed National Insurance rates — Class 4 contributions