Compulsory Class 2 ended in April 2024. For 2025/26 it is a £3.50-a-week voluntary contribution that only matters if your profits are below £6,725. Here is who should still pay it, and why.
Class 2 National Insurance is the contribution class that most people still half-remember as compulsory, and that is the heart of the confusion. The rules changed substantially from April 2024, and for 2025/26 Class 2 plays a much smaller but still meaningful role. For the great majority of sole traders it is now something they no longer pay at all, while still benefiting from it. For a smaller group, those with low profits, it remains one of the best-value voluntary contributions available anywhere in the tax system.
The reason Class 2 ever mattered is the State Pension. To get the full new State Pension you need around 35 qualifying years of National Insurance, and at least 10 to get anything at all. Employees rack up qualifying years automatically through payroll. For the self-employed, Class 2, and the threshold that now grants its credit for free, is the mechanism that decides whether a year counts.
For decades, sole traders with profits above the Small Profits Threshold had to pay Class 2 National Insurance, a flat weekly charge. From the 2024/25 tax year the government removed that requirement, and the change carries through unchanged into 2025/26. The mechanics now work like this:
In short, compulsory Class 2 was abolished, but the valuable National Insurance credit it provided was preserved for anyone trading above the threshold. This is one of the genuinely favourable features of the modern self-employed tax system: the pension benefit without the bill.
For 2025/26 the relevant numbers are a voluntary weekly rate and the threshold that governs when Class 2 matters at all.
| Item | 2025/26 figure |
|---|---|
| Voluntary Class 2 weekly rate | £3.50 |
| Approximate annual voluntary cost | £182 (52 x £3.50) |
| Small Profits Threshold | £6,725 |
| Class 2 due if profits above the threshold | £0 |
The £3.50 weekly rate is the figure to remember. Multiplied across a full year it comes to about £182, and that £182 buys a complete qualifying year towards your State Pension if your profits would not otherwise have earned one.
Because compulsory Class 2 is gone, the question is no longer "do I have to pay" but "should I choose to pay". The answer depends entirely on where your profit sits relative to the £6,725 Small Profits Threshold.
You should consider paying voluntary Class 2 if:
You probably do not need to pay voluntary Class 2 if:
The people most at risk of an underfunded State Pension are those with several years of genuinely low self-employment profits: new businesses finding their feet, part-time carers, or people winding down towards retirement. For them, the small annual cost is usually worth it.
You do not pay Class 2 through a separate process; it runs through your Self Assessment tax return. When your profit is below £6,725, the return presents the option to pay voluntary Class 2. Ticking that box adds the contribution, around £182, to your Self Assessment bill, payable by 31 January following the end of the tax year.
If you have already filed without selecting the voluntary contribution and later realise you want the qualifying year, you can usually amend your return within the amendment window, or contact HMRC directly to arrange payment. The sole trader tax calculator helps you see where your profit lands against the £6,725 threshold before you file, so you can make the voluntary-contribution decision deliberately rather than missing it.
Example 1: Above the threshold, nothing to pay. Ravi runs a self-employed gardening business with profit of £18,000 in 2025/26. This is well above the £6,725 Small Profits Threshold, so he pays no Class 2 at all and still earns a qualifying year for his State Pension. His National Insurance bill for the year is just the Class 4 on the profit above £12,570; Class 2 costs him nothing.
Example 2: Below the threshold, voluntary contribution worthwhile. Hannah is in the first year of a freelance writing business and makes £3,800 of profit, below the threshold. The year will not automatically count towards her State Pension. She chooses to pay voluntary Class 2 of about £182 to secure the qualifying year, judging it a sound investment while her business grows. She pays no income tax or Class 4 because her profit is below both relevant limits.
Example 3: Below the threshold, but already fully covered. Patrick has a small consultancy generating £5,000 of profit, below the threshold, but he also worked employed for the first half of the year and has already secured a qualifying year through PAYE. For him, paying voluntary Class 2 would be unnecessary, because the year already counts. He saves the £182.
Understanding Class 2 means seeing how it sits alongside the Small Profits Threshold and Class 4, because all three relate to the same scale of self-employment profit.
The two classes do completely different jobs. Class 4 National Insurance is a percentage charge on profits, 6 per cent between £12,570 and £50,270 and 2 per cent above, that builds no benefit entitlement by itself. Class 2 is the contribution that builds State Pension and benefit entitlement, now free above the threshold and voluntary below it. A sole trader on £40,000 of profit pays Class 4 but no Class 2, while still banking the pension year for free.
If you have a gap in your record and you are not self-employed, the alternative is voluntary Class 3 contributions, which cost far more, around £17.75 a week for 2025/26, roughly £923 a year. Voluntary Class 2 at £3.50 a week is dramatically cheaper for the same qualifying year, which is why self-employed people with low profits should almost always reach for Class 2 rather than Class 3 to plug a gap.
| Profit marker | 2025/26 figure | What it triggers |
|---|---|---|
| Small Profits Threshold | £6,725 | Free NI credits above; voluntary Class 2 available below |
| Lower Profits Limit | £12,570 | Class 4 National Insurance begins at 6% |
| Upper Profits Limit | £50,270 | Class 4 rate drops to 2% above this |
For the full picture of where the threshold itself sits, see the guide to the Small Profits Threshold, and for the profit-based charge that sits above it, the guide to Class 4 National Insurance.
Because Class 2 is now optional, it is easy to overlook, and an overlooked low-profit year can quietly erode a future pension. When you prepare each Self Assessment return, run a short check:
This five-minute review costs nothing and can prevent the kind of pension gap that is expensive to fix decades later. The sole trader calculator shows where your profit falls against the threshold so the decision is straightforward.
The abolition of compulsory Class 2 means most sole traders now get their State Pension year for free. The trap is the low-profit year: drop below £6,725 and the credit is no longer automatic, but £182 of voluntary Class 2 still buys it. That is the cheapest pension year you will ever find.
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