E8.1135 Employed versus self-employed
The most significant area of National Insurance planning is often categorisation (see E8.204). The potential savings in contributions on earnings drawn from a business in a self-employed capacity by contrast with those on employment income are considerable.
Example
| 2021/2022 |
| Annual earnings | £50,270 | | £54,000 | | £108,000 | |
| Employed | | | | | | |
| Class 1 – employee | 4,884.24 | | 4,958.84 | | 6,038.84 | |
| Class 1 – employer | 5,717.34 | | 6,232.08 | | 13,684.08 | |
| £10,601.58 | 21.09% | £11,190.92 | 20.72 % | £19,722.92 | 18.26% |
| Self-employed | | | | | | |
| Class 2 | 158.60 | | 158.60 | | 158.60 | |
| Class 4 | 3,663.18 | | 3,737.78 | | 4,817.78 | |
| £3,821.78 | 7.60% | £3,896.38 | 7.22% | £4,976.38 | 4.61% |
The following should be noted.
- Ìý
•ÌýÌýÌýÌý See T8.101 for current rates, including changes made to 2022/23 rates
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•ÌýÌýÌýÌý Prior to 6 April 2016, the self-employed were not entitled to the State Second Pension, S2P. Employees could only contract out of S2P if they participated in an appropriate employer-provided pension plan. If they did so, a lower rate (the
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Web page updated on 17 Mar 2025 17:12