National Insurance explained (2026/27)
By NetPayFinder team · Updated 5 October 2026 · Figures for the 2026/27 tax year, computed from official rates
Class 1 National Insurance thresholds and rates for 2026/27, how employee and employer NI are worked out, and what changes after State Pension age.
National Insurance (NI) is the second big deduction from most payslips after income tax. It builds your entitlement to the State Pension and some benefits, and it has its own thresholds, rates and rules. This guide covers Class 1 National Insurance for employees in the current tax year, plus what your employer pays on top.
Who pays National Insurance
You pay Class 1 National Insurance if you’re an employee aged 16 or over, under State Pension age, and earning more than the primary threshold from a job. Your employer deducts it from your pay automatically. Self-employed people pay different classes on their profits, which we cover briefly below and in our guide to self-employed vs employed tax.
NI contributions count towards your record for the State Pension. If you earn at least the lower earnings limit of £6,708 a year from a job, you get a qualifying year even if your pay is below the point where you start paying. GOV.UK’s National Insurance guide explains how your record works.
Class 1 thresholds and rates
These are the thresholds and rates for employees and employers this tax year:
| Threshold | A year | A month | A week |
|---|---|---|---|
| Primary threshold (employees start paying) | £12,570 | £1,048 | £242 |
| Upper earnings limit | £50,270 | £4,189 | £967 |
| Secondary threshold (employers start paying) | £5,000 | £417 | £96 |
- Employees pay 8% between the primary threshold and the upper earnings limit, and 2% above it.
- Employers pay 15% above the secondary threshold.
The thresholds are set for the year and published as weekly and monthly amounts, which payroll software uses each payday. You can check them on HMRC’s rates and thresholds for employers page.
How employee NI is worked out
Unlike income tax, National Insurance isn’t calculated on your total pay for the year. Each payday is looked at on its own:
- Take your pay for the period, after any salary sacrifice.
- Pay nothing on the part below the primary threshold for that period.
- Pay the main rate of 8% on the part between the primary threshold and the upper earnings limit.
- Pay 2% on anything above the upper earnings limit.
For someone paid the same amount every month, this works out the same as the annual figures. On a £30,000 salary, you pay £1,394 of NI a year, or £116.20 a month. On £60,000, it’s £3,211 a year, because the part above £50,270 is charged at the lower rate.
Because each period stands alone, NI can be higher than you’d expect in a month with a bonus or overtime. The extra pay is charged at the main rate up to that month’s upper limit, and the unused threshold from quieter months doesn’t carry forward. Our guide to how bonuses are taxed shows the effect.
Employer National Insurance
Your employer pays its own NI on your earnings. It isn’t taken from your pay, but it is part of what it costs to employ you. Employers pay 15% on earnings above the secondary threshold of £5,000 a year.
On a £30,000 salary, your employer pays about £3,750 a year on top of your salary. On £60,000, it’s about £8,250. Small employers can claim the Employment Allowance, which reduces their bill by up to £10,500 a year, and lower rates apply for employees under 21 and apprentices under 25 below certain limits.
Employer NI is the reason salary sacrifice schemes are popular with employers: when you give up pay in exchange for a pension contribution, your employer saves NI too, and some pass the saving on. See our salary sacrifice calculator.
After State Pension age
Once you reach State Pension age, you stop paying employee Class 1 National Insurance, even if you keep working. You still pay income tax as normal. Your employer continues to pay employer NI.
On a £30,000 salary, reaching State Pension age increases your take-home pay from £25,120 to £26,514 a year. Tick the “Over State Pension age” option in our take-home pay calculator to see your own figure.
National Insurance and income tax compared
The two deductions are often confused, but they work differently:
| Income tax | National Insurance | |
|---|---|---|
| Worked out on | Your total pay for the tax year | Each payday’s pay on its own |
| Starts at | Your tax-free allowance, shown in your tax code | The primary threshold |
| Higher earners | Higher rates on more income | A lower rate above the upper limit |
| Pension contributions | Reduce the tax you pay | Only reduce NI through salary sacrifice |
| Stops at State Pension age | No | Yes, for employees |
National Insurance on more than one job
If you have two jobs with different employers, each employer works out NI separately on the pay it gives you, using the full thresholds. This means you could earn below the primary threshold in each job and pay no NI at all, even though your total pay is above it. It also means you might pay the main rate in both jobs when your combined pay is above the upper earnings limit. In that case you may be able to defer some NI or get a refund. Our two jobs tax calculator shows NI for each job.
Category letters
Your payslip shows an NI category letter. It tells your employer which rates to use. Category A is the standard letter for most employees. Others include M for employees under 21, H for apprentices under 25, and C for people over State Pension age, where no employee NI is taken. If your letter looks wrong, for example you’re still on C after your employer’s records changed, ask your payroll team to check.
Self-employed National Insurance
If you’re self-employed, you pay Class 4 National Insurance on your profits instead: 6% between £12,570 and £50,270, and 2% above that. It’s paid through Self Assessment, not through payroll. Class 2 contributions are now voluntary for most people, but paying them can protect your State Pension record if your profits are low. The self-employed vs employed calculator compares the two on the same income.
Checking your NI
Your payslip shows the NI deducted each period and your total for the year so far. It also shows a category letter. Most employees are on category A. If yours looks wrong, ask your payroll team first. You can view your National Insurance record and check for gaps in your personal tax account on GOV.UK.