NI When Employed & Self-Employed

Key facts

You pay Class 1 NI on employment income (deducted through PAYE by your employer).
You also pay Class 2 and Class 4 NI on self-employment profits (through Self Assessment).
There is no “double counting” — each type of NI is calculated independently on its own income.
An annual maximum limits your total NI; you can apply for deferment or claim a refund if you overpay.

How NI Works When You Have Both

Many people in the UK are both employed and self-employed — for example, working a full-time job while running a freelance business on the side. In this situation, you pay National Insurance on both sources of income, but through different mechanisms.^[1]

What You Pay

Source of Income	NI Class	Rate (2025/26)	How It’s Collected
Employment earnings	Class 1 (employee)	8% (PT–UEL), 2% above UEL	Deducted by employer through PAYE
Self-employment profits	Class 2	£3.45/week flat rate	Through Self Assessment
Self-employment profits	Class 4	6% (£12,570–£50,270), 2% above	Through Self Assessment

No Double Counting

Each type of NI is calculated independently on its own income source:^[1]

Class 1 is calculated only on your employment earnings
Class 4 is calculated only on your self-employment profits
Your employment income does not increase your Class 4 bill
Your self-employment profits do not increase your Class 1 deduction

Example: You earn £35,000 from employment and £15,000 profit from self-employment.

Class 1: 8% on £22,430 (employment earnings between PT £12,570 and £35,000) = £1,794.40
Class 4: 6% on £2,430 (self-employment profit between £12,570 and £15,000) = £145.80
Class 2: £3.45 × 52 = £179.40
Total NI: £2,119.60

The Annual Maximum

There is an annual maximum amount of NI that any one person should pay. This prevents people with multiple income sources from paying substantially more NI than someone with the same total income from a single source.^[2]

The annual maximum for 2025/26 is calculated as:

53 weeks of Class 1 at the main rate on earnings between PT and UEL
Plus Class 2 contributions for the year
Plus 2% on all earnings and profits above the UEL/Upper Profits Limit

If your combined Class 1 and Class 4 contributions exceed this maximum, you may be due a refund.

Applying for NI Deferment

If you expect your total NI to exceed the annual maximum, you can apply to defer your Class 2 and/or Class 4 contributions:^[4]

Complete form CA72A (available from HMRC)
Submit it before the start of the tax year if possible
HMRC will assess whether deferment is appropriate
If granted, you defer Class 4 NI during the year
After the year ends, HMRC calculates the correct amount and you pay the balance (or receive a refund)

When deferment is worthwhile: Deferment is mainly useful if you have high employment earnings (already close to the UEL) and significant self-employment profits. If your self-employment profits are modest, deferment is unlikely to be necessary because your Class 4 bill will be small.

Do I Still Need Class 2?

If you are employed and earning above the Lower Earnings Limit, your employment already gives you a qualifying year for the State Pension through Class 1 contributions. In that case, Class 2 contributions are not strictly needed for pension purposes.^[3]

However, Class 2 is compulsory if your self-employment profits exceed the Small Profits Threshold (£6,845), regardless of whether you also have employment income.

Practical Tips

Register for Self Assessment — even if your self-employment income is small, you must report it
Keep income sources separate — maintain clear records of employment and self-employment income
Check your NI record annually — make sure both Class 1 and Class 2 are being recorded correctly
Budget for January — your Self Assessment bill (including Class 2 and 4 NI) is due on 31 January
Consider deferment — if your total earnings are above £50,270, check whether deferment would benefit you

What About Employer NI?

Your employer pays employer Class 1 NI (15% from April 2025) on your employment earnings. This is separate from everything above and does not affect your personal NI calculations. You do not pay employer NI — it is your employer’s cost.

Frequently Asked Questions

Do I pay NI twice if I am employed and self-employed?

You pay NI on both sources of income, but they are calculated independently. Class 1 is deducted from your employment earnings through PAYE, and Class 2/4 are added to your Self Assessment bill. An annual maximum prevents you from paying significantly more than someone with equivalent total earnings from one source.

Can I defer my NI if I am employed and self-employed?

Yes. If your combined Class 1 and Class 4 contributions are likely to exceed the annual maximum, you can apply to defer payment of Class 2 and/or Class 4. HMRC will calculate the correct amount after the end of the tax year and refund any overpayment.

How do I apply for NI deferment?

Apply using form CA72A (Application for Deferment of Payment of Class 2 and/or Class 4 National Insurance Contributions), available from HMRC. You should apply before the start of the tax year if possible. HMRC will write to confirm whether deferment has been granted.

Which NI do I pay first?

Class 1 is always collected first — your employer deducts it from every pay run through PAYE. Class 2 and Class 4 are calculated and collected later through your Self Assessment tax return. You cannot choose the order.

Sources

National Insurance if you're employed and self-employed — GOV.UK
National Insurance: introduction — GOV.UK
Self-employed National Insurance rates — GOV.UK
Defer your Self Assessment payment — GOV.UK