National Insurance Changes for the Self-Employed: What to Know in 2025
If you’re self-employed in the UK, staying on top of National Insurance contributions (NICs) is essential. The 2025 tax year brings important changes to how NICs are calculated and paid. These updates aim to simplify the system while ensuring fairness across different types of workers.
In this guide, we break down the key National Insurance changes for the self-employed in 2025 and what they mean for your tax planning.
1. Key Changes in 2025
As of April 2025, the government has implemented several reforms:
- Class 2 National Insurance abolished for most self-employed individuals
- Class 4 NIC rate reduced from 9% to 8% on profits between £12,570 and £50,270
- No change to Class 4 NIC at 2% on profits above £50,270
These changes simplify NICs and slightly reduce the tax burden for many self-employed earners.
2. What Happens to Class 2 NIC?
Previously, self-employed individuals paid a flat weekly Class 2 NIC to qualify for certain benefits like the State Pension.
From 2025:
- Class 2 NIC is abolished for those with profits above the Small Profits Threshold (currently £6,725)
- If your profits are below this threshold, you can still make voluntary Class 2 payments to protect your entitlement to benefits
3. Class 4 NIC Updates
Class 4 NIC is now the main contribution for self-employed individuals with annual profits over £12,570. Key updates:
- 8% NIC rate applies to profits between £12,570 and £50,270
- 2% NIC rate applies to profits over £50,270
This represents a 1% reduction in the main rate, offering modest savings.
4. Voluntary NIC Contributions
You may want to pay voluntary NICs if:
- Your earnings are low
- You want to maintain your State Pension record or access other benefits
Voluntary Class 2 contributions remain a low-cost way to protect future entitlements, even if you fall under the earnings threshold.
5. Implications for Tax Planning
With these changes:
- Most self-employed individuals will see a slight reduction in their NIC bill
- Record-keeping and profit calculations remain crucial to ensure accurate contributions
- If you’re below the Small Profits Threshold, consider voluntary contributions as part of retirement planning
How Eclat Accountancy Can Help
At Eclat Accountancy, we help self-employed clients:
- Understand how the 2025 NIC changes affect them
- Optimise their tax and NIC liabilities
- Make informed decisions about voluntary contributions
- Ensure compliance with HMRC regulations
Final Thoughts
The National Insurance changes for the self-employed in 2025 are designed to streamline the system and offer slight savings for many individuals. However, understanding the new rules-and how they apply to your unique situation—is key to effective tax planning.
Contact Eclat Accountancy today for tailored advice on managing your self-employed taxes and contributions in 2025 and beyond.
