Voluntary National Insurance Contributions: Should You Consider Class 2?

Understanding the Basics for the Self-Employed

If you’re self-employed and your profits exceed the lower profits limit, currently set at £12,570 for 2025/26, you’re required to pay Class 4 National Insurance contributions. These are charged at 6% on profits between £12,570 and £50,270, and at 2% on profits above that threshold.

Importantly, paying Class 4 National Insurance gives you a qualifying year for state pension purposes. But what if your profits fall below this threshold?

When You Don’t Have to Pay, But Might Want To

If your profits are below £12,570, you won’t need to pay Class 4 contributions. However, if your profits are at least £6,845 (the small profits threshold), you automatically receive a National Insurance credit. This means you get a qualifying year for state pension purposes without having to pay anything.

But if your profits fall below £6,845, you don’t get this credit. Unless you qualify for other credits (such as those provided via child benefit or through Class 1 contributions from employment), you may fall short of qualifying years for your state pension. In that case, making voluntary contributions might be worth considering.

Voluntary Class 2 vs. Class 3 Contributions

The good news is that if you’re self-employed and your profits are below the small profits threshold, you can opt to pay voluntary Class 2 contributions. This is significantly cheaper than Class 3 contributions.

For 2025/26:

• Voluntary Class 2 contributions are £3.50 per week (£182 annually).
• Voluntary Class 3 contributions are £17.75 per week (£923 annually).

Choosing Class 2 over Class 3 could save you a substantial £741 for the tax year.

Is It Worth Paying Voluntary Contributions?

Before deciding to pay voluntary contributions, it’s wise to consider your long-term state pension position.

To receive the full state pension, you need 35 qualifying years. If you already have this, or are confident you will by retirement age, paying extra may be unnecessary.

If you have between 10 and 34 qualifying years, you’ll receive a partial state pension. In this case, topping up may be beneficial, especially if doing so pushes you over a milestone (like reaching the 10-year minimum for any state pension at all).

However, if you’re unlikely to reach 10 qualifying years even with the contributions, it may not be worth the investment.

You can check your state pension forecast online at: www.gov.uk/check-state-pension

How to Pay

Voluntary Class 2 contributions are made through the Self-Assessment system, and there is a generous window to act: you have up to six years to make these payments.

Final Thought

Paying voluntary Class 2 National Insurance is a cost-effective way for low-earning self-employed individuals to protect their state pension entitlements. But like any financial decision, it should be guided by your long-term goals and current contributions history.

Partner Note: SSCBA 1992, s. 11.