Class 4 is charged on self-employed profits through Self Assessment. For 2026/27 the rates are 6% on profits between £12,570 and £50,270 and 2% above that. It is calculated on your final profit figure, so every allowable expense you claim saves Class 4 as well as income tax.
Since April 2024 the self-employed no longer have to pay Class 2, but profits above the small profits threshold still earn State Pension credits automatically, and those with very low profits can pay Class 2 voluntarily (£3.65 a week in 2026/27) to protect their record. Model your whole bill with the Self-Employed Tax Calculator.
A sole trader with £40,000 of profit pays Class 4 of £1,645.80 (6% of the £27,430 above the lower limit) on top of £5,486 income tax. Every £100 of allowable expenses claimed saves £26 in combined tax and Class 4: complete expense records translate directly into money.
