Sole Trader Class 2 & 4 NI Calculator UK

Q: What's the difference between Class 2 and Class 4 NI?

Class 4 is the percentage charge on your profits, 6% between £12,570 and £50,270, then 2%, collected through Self Assessment. Class 2 is the flat-rate contribution that builds your State Pension and certain benefits. The counter-intuitive part is that Class 4, the bigger bill, earns you no entitlement at all, while Class 2, now usually free above the Small Profits Threshold, is the one that actually counts towards your pension.

Q: How much Class 4 National Insurance will I pay?

You pay 6% on profits between £12,570 and £50,270, then 2% above. So on £30,000 of profit it is (£30,000 minus £12,570) times 6% = £1,045.80. The 6% band maxes out at £2,262, after which the rate drops to 2%. Class 4 is calculated as part of your Self Assessment, alongside Income Tax, and usually collected through payments on account in January and July. It sits on top of your Income Tax bill, so budget for it.

Q: Do I still have to pay Class 2 National Insurance?

Usually not. Since April 2024, if your profits are above the £7,105 Small Profits Threshold, Class 2 is treated as paid, so you get the qualifying year for your State Pension at no cost, with nothing to actually pay. If your profits are below £7,105, you do not get this automatically, but you can choose to pay voluntary Class 2 at £3.65 a week to protect your record. So Class 2 is effectively free for most sole traders and a cheap option for low earners who want to opt in.

Q: What is the Small Profits Threshold?

It is the profit level, £7,105, above which Class 2 is treated as paid, giving you a free qualifying year towards your State Pension. Below it, nothing is credited automatically. This makes £7,105 the crucial figure for low earners. Above it, you are covered for free; below it, your year does not count unless you pay voluntary Class 2. A sole trader having a lean year needs to watch this threshold, because dropping under it without acting can cost a State Pension year.

Q: Does Class 4 NI count towards my State Pension?

No. Class 4 builds no State Pension or benefit entitlement at all, despite often being the largest part of a sole trader's NI bill. It is effectively just an additional tax on your profits. The contribution that counts is Class 2, whether you pay it voluntarily or it is treated as paid because your profits are above £7,105. This surprises many sole traders, who assume their substantial Class 4 payments are securing their pension.

Q: Should I pay voluntary Class 2 if my profits are low?

Often yes. If your profits are below £7,105 and you would otherwise have a gap in your record, voluntary Class 2 costs about £190 for the year (£3.65 times 52) and secures a qualifying year. The same year bought back later as Class 3 costs nearly £960. It is usually worth it if you are short of the 35 qualifying years needed for the full new State Pension. It may not be worth it if a job's Class 1 NI already covers the year, or if you already have 35 years.

Q: How and when do I pay Class 2 and Class 4 NI?

Both go through Self Assessment. Class 4 is calculated automatically from your profits and is usually paid via payments on account on 31 January and 31 July, with any balance due by 31 January. Voluntary Class 2, if you choose to pay it, is also reported and paid through your Self Assessment return. You do not pay either separately or weekly; it is all settled as part of your annual tax return, which is why it is easy to overlook the Class 2 decision if you are a low earner.

Q: I'm employed and self-employed — how does NI work?

You can pay Class 1 NI on your employed earnings and Class 4 on your self-employment profits in the same year. If your job's Class 1 already secures a qualifying year, you may not need voluntary Class 2 from low self-employment profits. There is also an annual maximum that can cap your combined contributions, so very high earners across both can sometimes claim a refund. Check your NI record before paying voluntary Class 2, so you do not pay twice for a year you already have.

Work out your National Insurance as a sole trader — and untangle the reform that made the cheap, valuable contribution voluntary while the expensive one buys you nothing.

Class 4 6% then 2% Class 2 now voluntary Free, no signup

As a sole trader you can face two kinds of National Insurance, and the counter-intuitive part is which one matters. Class 4 is the percentage charge on your profits — 6% on profits between £12,570 and £50,270, then 2% above — and it can run to over £2,000 a year, yet it builds no State Pension or benefit entitlement at all. Class 2 is the flat-rate contribution that does count towards your State Pension — and since April 2024 it’s effectively been made voluntary. If your profits are above the £7,105 Small Profits Threshold, Class 2 is treated as paid for free, so you get the qualifying year at no cost. But if your profits fall below £7,105, you get nothing automatically — and a qualifying year you could protect for about £190 in voluntary Class 2 is easily lost, when buying it back later as Class 3 costs nearly £960. This calculator shows your Class 2 and Class 4 position and flags whether you should be paying voluntarily. For the full tax picture, use the Self-Employed Tax Calculator; to weigh up incorporating, the Sole Trader vs Ltd Calculator.

Common examples:

Self-employed profit

Annual self-employed profit

Use taxable self-employed profit after allowable business expenses.

Tax year

Employment income in same year

Shown as a warning only. Mixed employed/self-employed NI can be adjusted by HMRC.

Reached State Pension age before tax year starts?

Class 2 National Insurance

Class 2 option

From 2024/25, many self-employed people do not have to pay Class 2 but may choose to pay voluntarily.

Class 2 weeks

weeks

Custom thresholds and rates

Small Profits Threshold

Class 2 weekly rate

Class 4 Lower Profits Limit

Class 4 Upper Profits Limit

Class 4 main rate

Class 4 additional rate

Planning view

Show monthly set-aside

Round result

National Insurance result

Estimated total NI

Calculating…

Class 4 NI

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Class 2 NI

—

Monthly set-aside

—

Effective NI rate

—

Profit over LPL

—

Status

—

Class 2 and Class 4 breakdown

Calculating…

Simplified estimate only. Mixed employed/self-employed income, State Pension age, special Class 4 categories and voluntary contribution choices can change the actual Self Assessment result.

✦ Explain with AI →

Sole trader NI — quick lookup

The left table shows the Class 4 NI you’d pay at common profit levels. The right lists the key thresholds and rates. The headline is in the left table: Class 4 is the bill that grows with your profit, but as the bands below explain, it’s Class 2 — now usually free — that actually counts towards your State Pension.

Class 4 NI by annual profit

Profit	Class 4 NI
£12,570	£0
£20,000	£446
£30,000	£1,046
£50,270	£2,262
£60,000	£2,457

Key thresholds & rates

Item	Value
Class 4 main rate	6%
Class 4 upper rate	2%
Lower Profits Limit	£12,570
Upper Profits Limit	£50,270
Small Profits Threshold	£7,105

Class 4 is 6% on profits between £12,570 and £50,270, then 2% above — so £30,000 of profit gives (£30,000 − £12,570) × 6% = £1,046, and the charge maxes out at £2,262 across the 6% band before dropping to 2%. The Small Profits Threshold of £7,105 is the level above which Class 2 is treated as paid for free. Below it, Class 2 becomes a voluntary £3.65 a week if you want to protect your record.

How sole trader National Insurance works

Self-employed National Insurance comes in two classes that work in completely different ways — and a 2024 reform changed the picture in a way that still confuses people. The crucial thing to grasp is which contribution costs you money and which one earns you benefits, because they’re not the same one.

Class 4 — the percentage charge that buys nothing

Class 4 is calculated on your profits, alongside Income Tax, through Self Assessment. You pay 6% on profits between £12,570 (the Lower Profits Limit) and £50,270 (the Upper Profits Limit), then 2% on anything above. It’s the bigger bill — over £2,000 a year once you’re earning well — but here’s the catch most people don’t realise: Class 4 builds no State Pension or benefit entitlement whatsoever. It’s a tax on your profits in all but name.

Class 4 calculation(profit up to £50,270 − £12,570) × 6% + (profit over £50,270) × 2% = Class 4 NI Example, £30,000 profit: (£30,000 − £12,570) × 6% = £17,430 × 6% = £1,045.80

Class 2 — the flat-rate contribution that counts

Class 2 is the contribution that actually builds your State Pension record and entitlement to certain benefits like Maternity Allowance. It used to be a compulsory flat weekly charge, but since April 2024 it’s been reformed: if your profits are above the £7,105 Small Profits Threshold, Class 2 is “treated as paid” — you get the qualifying year for free, with nothing to actually pay. If your profits are below £7,105, you get nothing automatically, but you can pay voluntary Class 2 at £3.65 a week to protect your record.

The four-band picture after the reform

Putting the two together creates four profit bands. Below £7,105, nothing counts automatically and you’d pay voluntary Class 2 to protect your pension. Between £7,105 and £12,570, Class 2 is treated as paid (free qualifying year) and there’s no Class 4. Between £12,570 and £50,270, you pay 6% Class 4 and still get the free Class 2 credit. Above £50,270, Class 4 drops to 2% on the excess. The odd result: the people who most need to act — those under £7,105 — are the ones the automatic system leaves out.

Worked examples

Four sole traders at different profit levels, showing how the two classes interact.

Scenario 1 · Low profits, below the SPT

The cheap qualifying year at risk

Profit £5,000 · below the £7,105 SPT
Class 4: £0 · Class 2 automatic: none
Voluntary Class 2 to protect pension: £3.65 × 52 = £189.80

A part-time sole trader making £5,000 pays no Class 4 and gets no automatic Class 2 credit, because they’re below the Small Profits Threshold. This is the danger zone: without action, the year doesn’t count towards their State Pension. Paying voluntary Class 2 — about £190 for the year — buys that qualifying year cheaply. Skip it and buying the year back later as Class 3 costs nearly £960. For low earners, this is the most valuable decision on the page.

Scenario 2 · Between SPT and the personal allowance

A free qualifying year

Profit £10,000 · above £7,105, below £12,570
Class 4: £0 · Class 2: treated as paid (free credit)
Nothing to pay, full qualifying year secured

A sole trader making £10,000 sits in the sweet spot. They’re above the £7,105 threshold, so Class 2 is treated as paid and they bank a qualifying year for the State Pension at no cost. But they’re below £12,570, so there’s no Class 4 to pay either. This is the only band where you get the pension credit entirely free and pay nothing in NI at all — the reform’s intended benefit for low-earning sole traders.

Scenario 3 · Typical full-time sole trader

Class 4 bites, Class 2 still free

Profit £30,000
Class 4: (£30,000 − £12,570) × 6% = £1,045.80
Class 2: treated as paid (free) · total NI: £1,045.80

A sole trader on £30,000 pays £1,045.80 in Class 4 NI on top of their Income Tax, all collected through Self Assessment. Their Class 2 is treated as paid automatically, so the qualifying year is free — but remember, it’s that free Class 2, not the £1,045.80 of Class 4, that’s actually protecting their State Pension. The Class 4 charge is effectively just an extra tax on the profit.

Scenario 4 · Higher earner, into the 2% band

The rate drops above £50,270

Profit £60,000
(£50,270 − £12,570) × 6% = £2,262.00
+ (£60,000 − £50,270) × 2% = £194.60 → total £2,456.60

A sole trader on £60,000 pays the full 6% across the main band (£2,262) plus 2% on the £9,730 above the Upper Profits Limit (£194.60), for £2,456.60 of Class 4. The rate stepping down to 2% above £50,270 mirrors how employee NI works. As ever, none of this Class 4 builds entitlement — the qualifying year still comes from the free Class 2 credit they get for being above £7,105.

Which contribution actually counts — and the trap it creates

The single most misunderstood thing about sole trader NI is that the contribution you pay the most of buys you nothing, while the one that’s now usually free is the one that matters. Get this backwards and you can pay thousands in Class 4 yet still end up with a gap in your pension record. Work through the four bands:

1

Below £7,105 — the action zone

No Class 4, and no automatic Class 2 credit. Your year doesn’t count towards the State Pension unless you act. Paying voluntary Class 2 (£3.65/week, about £190/year) buys the qualifying year cheaply — the most valuable move for a low earner.
pay voluntary Class 2 or lose the year
2

£7,105 – £12,570 — the free zone

Class 2 is treated as paid, so the qualifying year is free, and you’re still under the Class 4 threshold, so there’s nothing to pay at all. The only band where you get the pension credit and pay zero NI. The reform’s intended sweet spot.
free qualifying year · £0 to pay
3

£12,570 – £50,270 — the 6% band

You pay 6% Class 4 on profit above £12,570, and still get the free Class 2 credit. The Class 4 is the bill you feel, but it’s the (free) Class 2 doing the pension work. Class 4 here is, in effect, just an extra tax on profit.
6% Class 4 · Class 2 still free
4

Above £50,270 — the 2% band

Class 4 drops to 2% on profit over £50,270, so very high profits attract proportionally less NI. The qualifying year is still the same free Class 2 credit — extra profit beyond this point adds Class 4 cost but no extra benefit entitlement.
2% on the excess · no extra benefit

Protecting a State Pension year — Class 2 vs Class 3

The cost of one qualifying year, two ways:

Voluntary Class 2 (£3.65 × 52)£189.80

Voluntary Class 3 (£18.40 × 52)£956.80

Class 4 paid at £30k profit£1,045.80

Saving from using Class 2, not Class 3£767.00

The numbers tell the story. A qualifying State Pension year costs about £190 if you protect it in time with voluntary Class 2, but nearly £960 if you have to buy it back later as Class 3 — a £767 difference for the same year. Meanwhile a sole trader on £30,000 pays over £1,000 in Class 4 that earns them no entitlement at all. The practical takeaway: don’t judge your NI by the size of the Class 4 bill. If your profits are reliably above £7,105 you’re already covered for free; if they dip below, seriously consider voluntary Class 2 before the cheap window closes. Check your record on your gov.uk State Pension forecast if you’re unsure where you stand.

Why this catches people out

Before April 2024, Class 2 was a small compulsory payment that automatically protected your record, so nobody had to think about it. Making it “voluntary” simplified the system for most — those above £7,105 get the credit for free — but it quietly shifted the risk onto the lowest earners, who now have to opt in. A sole trader having a lean year, dropping under £7,105, can lose a qualifying year without ever seeing a bill that prompts them to act. That silence is exactly where the trap lies.

Two scenarios that change the picture

What if…

Your profits drop below £7,105 this year?

Automatic Class 2 credit none

Voluntary Class 2 to fix it £189.80

Cost to buy it back later (Class 3) £956.80

A lean year under £7,105 means no automatic qualifying year. Paying voluntary Class 2 (~£190) protects it now; leaving it and buying the year back later as Class 3 costs nearly £960. If you’re short of the 35 years needed for a full State Pension, this is almost always worth doing.

What if…

You’re employed as well as self-employed?

Class 1 from the job may cover year

Class 4 on self-employment still due

Voluntary Class 2 needed? often not

If your employed Class 1 NI already gives you a qualifying year, you may not need voluntary Class 2 from low self-employment profits — the year is already covered. You’d still pay Class 4 on profits above £12,570, and an annual maximum can cap combined contributions. Check your record before paying twice for the same year.

Key sole trader NI terms explained

Sole trader National Insurance brings together two contribution classes, a set of profit thresholds, and the benefit entitlement they do — or don’t — build. The ten terms below cover what you’ll meet in your Self Assessment.

Class 4 NI: The percentage charge on a sole trader’s profits — 6% between £12,570 and £50,270, then 2% above. It’s the bigger NI bill, paid through Self Assessment, but it builds no State Pension or benefit entitlement.
Class 2 NI: The flat-rate contribution that counts towards your State Pension and some benefits. Now usually free: above the Small Profits Threshold it’s treated as paid; below it, voluntary at £3.65 a week.
Small Profits Threshold (SPT): The profit level — £7,105 — above which Class 2 is treated as paid, giving a free qualifying year. Below it, nothing counts automatically and you’d pay voluntary Class 2 to protect your record.
Lower Profits Limit (LPL): The profit level — £12,570 — above which Class 4 NI starts. It’s aligned with the Income Tax personal allowance, so you start paying Class 4 at the same point you start paying Income Tax.
Upper Profits Limit (UPL): The profit level — £50,270 — above which the Class 4 rate drops from 6% to 2%. It mirrors the point where employee NI also steps down, and where higher-rate Income Tax begins.
Treated as paid: The status of Class 2 when your profits are above the SPT but you pay nothing. HMRC credits you as if you’d paid, so you bank a qualifying year for free. The core of the 2024 Class 2 reform.
Qualifying year: A tax year that counts towards your State Pension. You generally need 35 qualifying years for the full new State Pension, and at least 10 to get any. Class 2 (paid or credited) earns one; Class 4 does not.
Voluntary contributions: Payments you can choose to make to fill gaps in your NI record. For the self-employed, voluntary Class 2 (£3.65/week) is far cheaper than voluntary Class 3 (£18.40/week) for the same qualifying year.
Class 3 NI: The voluntary contribution used to fill record gaps when Class 2 isn’t available — £18.40 a week. It’s the expensive fallback: nearly £960 for a year that voluntary Class 2 would secure for about £190.
Self Assessment: The annual tax return through which sole traders report profits and pay both Class 4 and any voluntary Class 2, alongside Income Tax. Class 4 is usually collected via payments on account in January and July.

Five mistakes sole traders make with NI

Sole trader NI looks simple but the 2024 reform created new traps, especially for low earners. These five errors, drawn from the recurring r/UKPersonalFinance and r/SmallBusinessUK threads, are the costly ones.

Letting a low-profit year slip through unprotected

If your profits drop below £7,105, no qualifying year is credited automatically. Many sole traders don’t notice, because there’s no bill prompting them. Paying voluntary Class 2 (~£190) protects the State Pension year; ignore it and buying it back later as Class 3 costs nearly £960.

Cost: a lost State Pension year (~£767 more to fix) Fix: pay voluntary Class 2 in a lean year

Thinking Class 4 builds your pension

It doesn’t. Class 4 builds no State Pension or benefit entitlement — it’s effectively a tax on profit. The qualifying year comes from Class 2 (paid or credited). Sole traders who assume their large Class 4 bill is “buying” their pension can be caught out by a gap in their record.

Cost: a false sense of being covered Fix: rely on Class 2, not Class 4, for credits

Paying Class 3 when Class 2 was available

For the same qualifying year, Class 2 (£3.65/week) is far cheaper than Class 3 (£18.40/week). Eligible self-employed people who fill a gap with Class 3 instead of voluntary Class 2 overpay by around £767 a year. Always check whether voluntary Class 2 is open to you first.

Cost: ~£767 per year overpaid Fix: use voluntary Class 2 where eligible

Forgetting NI when budgeting for the tax bill

Class 4 sits on top of Income Tax and can add over £2,000 to a Self Assessment bill. Sole traders who set aside only for Income Tax get a shock in January. Budget for Class 4 as part of your tax provision — roughly 6% of profit above £12,570 up to £50,270.

Cost: an unexpected January shortfall Fix: set aside for Class 4 alongside Income Tax

Paying voluntary Class 2 when already covered

If you also have a job, your employed Class 1 NI may already secure the qualifying year. Paying voluntary Class 2 on low self-employment profits as well can be money wasted, since you only need one qualifying year. Check your NI record before paying twice for the same year.

Cost: paying for a year you already have Fix: check your record before paying voluntarily

Frequently asked questions

What’s the difference between Class 2 and Class 4 NI?

Class 4 is the percentage charge on your profits — 6% between £12,570 and £50,270, then 2% — collected through Self Assessment. Class 2 is the flat-rate contribution that builds your State Pension and certain benefits.

The counter-intuitive part is that Class 4, the bigger bill, earns you no entitlement at all, while Class 2 — now usually free above the Small Profits Threshold — is the one that actually counts towards your pension.

How much Class 4 National Insurance will I pay?

You pay 6% on profits between £12,570 and £50,270, then 2% above. So on £30,000 of profit it’s (£30,000 − £12,570) × 6% = £1,045.80. The 6% band maxes out at £2,262, after which the rate drops to 2%.

Class 4 is calculated as part of your Self Assessment, alongside Income Tax, and usually collected through payments on account in January and July. It’s a significant cost that sits on top of your Income Tax bill, so budget for it.

Do I still have to pay Class 2 National Insurance?

Usually not. Since April 2024, if your profits are above the £7,105 Small Profits Threshold, Class 2 is “treated as paid” — you get the qualifying year for your State Pension at no cost, with nothing to actually pay.

If your profits are below £7,105, you don’t get this automatically, but you can choose to pay voluntary Class 2 at £3.65 a week to protect your record. So Class 2 is effectively free for most sole traders and a cheap option for low earners who want to opt in.

What is the Small Profits Threshold?

It’s the profit level — £7,105 — above which Class 2 is treated as paid, giving you a free qualifying year towards your State Pension. Below it, nothing is credited automatically.

This makes £7,105 the crucial figure for low earners. Above it, you’re covered for free; below it, your year doesn’t count unless you pay voluntary Class 2. A sole trader having a lean year needs to watch this threshold closely, because dropping under it quietly without acting can cost a State Pension year.

Does Class 4 NI count towards my State Pension?

No. Class 4 builds no State Pension or benefit entitlement at all — despite often being the largest part of a sole trader’s NI bill. It’s effectively just an additional tax on your profits.

The contribution that counts is Class 2, whether you pay it voluntarily or it’s treated as paid because your profits are above £7,105. This surprises many sole traders, who assume their substantial Class 4 payments are securing their pension. Check your record on the gov.uk State Pension forecast.

Should I pay voluntary Class 2 if my profits are low?

Often yes. If your profits are below £7,105 and you’d otherwise have a gap in your record, voluntary Class 2 costs about £190 for the year (£3.65 × 52) and secures a qualifying year. The same year bought back later as Class 3 costs nearly £960.

It’s usually worth it if you’re short of the 35 qualifying years needed for the full new State Pension. It may not be worth it if a job’s Class 1 NI already covers the year, or if you already have 35 years. Check your forecast before deciding.

How and when do I pay Class 2 and Class 4 NI?

Both go through Self Assessment. Class 4 is calculated automatically from your profits and is usually paid via payments on account on 31 January and 31 July, with any balance due by 31 January.

Voluntary Class 2, if you choose to pay it, is also reported and paid through your Self Assessment return. You don’t pay either separately or weekly — it’s all settled as part of your annual tax return, which is why it’s easy to overlook the Class 2 decision if you’re a low earner.

I’m employed and self-employed — how does NI work?

You can pay Class 1 NI on your employed earnings and Class 4 on your self-employment profits in the same year. If your job’s Class 1 already secures a qualifying year, you may not need voluntary Class 2 from low self-employment profits.

There’s also an annual maximum that can cap your combined contributions, so very high earners across both can sometimes claim a refund. The key practical point: check your NI record before paying voluntary Class 2, so you don’t pay twice for a year you already have. See gov.uk.

National Insurance is one part of a sole trader’s tax bill. These calculators handle the Income Tax, the wider picture, and whether to incorporate.

Methodology & sources

How the maths works

The calculator takes your annual self-employment profit and applies Class 4 NI: 6% on the slice between the £12,570 Lower Profits Limit and the £50,270 Upper Profits Limit, then 2% on anything above — so £30,000 of profit gives (£30,000 − £12,570) × 6% = £1,045.80, and the 6% band caps at £2,262. It separately checks your Class 2 position against the £7,105 Small Profits Threshold: above it, Class 2 is treated as paid and a qualifying year is credited for free; below it, it shows the cost of voluntary Class 2 (£3.65 × 52 ≈ £190) and contrasts it with the much higher Class 3 alternative (£18.40 × 52 ≈ £957) for the same year. It flags that Class 4 builds no benefit entitlement, so the qualifying year always comes from Class 2.

These are illustrative comparisons based on the current rates and thresholds. Real outcomes depend on your exact profit, whether you also have employed earnings, your existing National Insurance record and how many qualifying years you already have, the annual maximum across contribution classes, and the current rates, all of which can change. The aim is to show your Class 2 and Class 4 position and whether voluntary Class 2 is worth paying, not to replace tailored tax advice or a State Pension forecast.

Assumptions and conventions used

Class 4: 6% on profit £12,570–£50,270, 2% above £50,270
Lower Profits Limit: £12,570 · Upper Profits Limit: £50,270
Small Profits Threshold: £7,105
Class 2 above SPT: treated as paid (free qualifying year)
Voluntary Class 2: £3.65 per week (~£190/year)
Voluntary Class 3: £18.40 per week (~£957/year)
Class 4 builds no benefit entitlement; Class 2 does
Rates and thresholds shown are illustrative current UK figures

Primary sources

This is not tax or financial advice. This calculator shows your Class 2 and Class 4 National Insurance position as a sole trader, and whether voluntary Class 2 may be worth paying, using standard formulas and general conventions. The rates, thresholds, and figures shown are illustrative to demonstrate how the contributions behave, not personal advice or a recommendation. Your actual position depends on your profit, whether you also have employed earnings, your existing National Insurance record, how many qualifying years you already have, the annual maximum across contribution classes, and the current rates, all of which can change. Class 4 builds no benefit entitlement, while Class 2 — paid or treated as paid — counts towards your State Pension; whether to pay voluntary contributions depends on your individual record. Before deciding on voluntary contributions, check your State Pension forecast and consult a qualified accountant, and see official guidance at gov.uk.