Understanding Class 2 National Insurance Contributions (2025 Update)

What are Class 2 National Insurance Contributions?

Class 2 National Insurance Contributions (NICs) are payments made by self-employed individuals to help build entitlement to the State Pension and other benefits.Until recently, Class 2 NICs were paid through the tax return process if your profits exceeded a certain threshold.

However, from 6 April 2024, the rules changed:

• If your self-employed profits are over £6,725 (for the 2024/25 tax year), you no longer need to pay Class 2 NICs directly.

• Instead, your contributions are recorded automatically through your Self Assessment, giving you a qualifying year for your State Pension at no extra cost.

  
  

My self-employed profits are low — do I still need to read on?

Yes! If your profits are below £6,725, you won't automatically get a qualifying year toward your State Pension.However, you can choose to pay voluntary Class 2 NICs (around £3.45 per week) to protect your entitlement.

At Glass Accountants, we strongly recommend paying voluntary Class 2 NIC if:

• You are not paying NIC through any other means (such as employment).

• You want to protect your future State Pension or benefits.

Why is it important to pay voluntary Class 2 NIC?

Paying Class 2 NIC builds entitlement to:

• The State Pension

• Bereavement Benefits

• Maternity Allowance

• Employment and Support Allowance

In this article, we’re focusing on the State Pension, as it is one of the most important long-term benefits.

The State Pension and Qualifying Years

To receive the full New State Pension, you need:

• At least 35 qualifying years of National Insurance contributions.

To get any State Pension at all, you need:

• At least 10 qualifying years.

In 2025, the New Full State Pension is £221.20 per week — that's over £11,500 per year. Missing qualifying years could dramatically reduce what you receive in retirement.

But I've been filing tax returns for years — doesn't HMRC already know?

Not always! While the Self Assessment system has improved, filing a tax return does not automatically:

• Register you as self-employed

• Protect your NIC record if you have low profits

  
  

You still need to actively ensure you're paying or credited appropriately — especially if your income fluctuates year to year.

What happens if I have gaps in my National Insurance record?

If you don't have enough qualifying years:

• You may receive a reduced State Pension.

• If you have fewer than 10 years, you may receive no State Pension at all.

  
  

You can sometimes make up missing years by paying voluntary NICs (Class 2 or Class 3).

However:

• Class 3 NICs (for older gaps) are much more expensive — around £17.45 per week (2025 rates).

• Paying Class 3 can cost around £900 per year.

It’s far cheaper to keep up with voluntary Class 2 NICs wherever possible.

How can I check my National Insurance record?

You can easily check your record online:👉 Check your National Insurance record on GOV.UK

Or call HMRC’s helpline: 0300 200 3500.

What should I do if I find gaps?

If you spot missing years:

• Contact HMRC directly as soon as possible.

• Ask about making voluntary contributions to fill any gaps.

• If possible, catch up using cheaper Class 2 NICs rather than costly Class 3 NICs.

  
  

You can usually backdate for up to six tax years, but the sooner you act, the better.

It's not all doom and gloom!

If you’ve discovered you have gaps, don't panic. Spotting the problem now gives you time to fix it — and protect your future pension. As always, if you have any questions, the team at Glass Accountants are here to help. Feel free to get in touch — we’ll guide you through checking your record, making voluntary payments, and staying on track for a full State Pension.