Self-employed earners whose earnings exceed the lower profits limit (set at £12,570 for 2025/26) must pay Class 4 National Insurance contributions on their profits. These are payable at the rate of 6% on profits between the lower limit and the upper limit, set at £50,270 for 2025/26, and at a rate of 2% on profits in excess of the upper profits limit. It is the payment of Class 4 National Insurance contributions which provides a self-employed earner with a qualifying year for state pension purposes.

Where profits from self-employment are below £12,570 for 2025/26, a self-employed earner will not have to pay Class 4 National Insurance contributions for that year. However, if their profits are at least equal to the small profits threshold, which is set at £6,845, the self-employed earner receives a National Insurance credit which provides them with a qualifying year for state pension purposes without them having to pay anything for it.

However, self-employed earners whose profits are below £6,845 do not benefit from the credit. This means that unless they receive other credits, for example, because they receive child benefit, or have paid sufficient Class 1 contributions, they will need to pay voluntary contributions for 2025/26 to be a qualifying year.

Voluntary Class 2

Self-employed earners whose profits are less than the small profits threshold can pay voluntary Class 2 contributions instead of paying Class 3 voluntary contributions. This is a much cheaper option – for 2025/26, voluntary Class 2 contributions are payable at a rate of £3.50 a week whereas Class 3 contributions are £17.75 a week. Paying voluntary Class 2 contributions rather than Class 3 contributions for 2025/26 will save the individual £741.

Although paying voluntary Class 2 contributions will only cost £182 for 2025/26, before opting to pay them, it is important to check whether it will be worthwhile.

To receive a full state pension, a person needs 35 qualifying years. If they have this already or will do so by the time that they reach state pension age, there is no point in making the contributions. A person can check their state pension forecast by visiting the Gov.uk website at www.gov.uk/check-state-pension.

A person who has less than 35 qualifying years but at least ten will receive a reduced state pension. Paying voluntary contributions is worthwhile if after doing so a person will have a least ten qualifying years. If after making the contributions they will still not have reached ten qualifying years and are unlikely to do so by the time they reach state pension age, making voluntary Class 2 contributions is not worthwhile.

Contributions are paid through the Self Assessment system. There is a six-year window in which to pay the contributions.