Last updated: 29 July 2026 · Sourced from official UK government publications
This is a plain-English definitions guide covering the 2026/27 tax year (6 April 2026 to 5 April 2027). All rates and thresholds are drawn from HMRC and gov.uk official sources. This is not financial advice, see the disclaimer below.
If you are employed, you pay 8% National Insurance on everything you earn between £12,570 and £50,270 a year, and 2% on anything above that. Those rates and thresholds are the same in 2026/27 as they were last year. Below is what NI actually is, who pays it, what it buys you, and how the maths works on a real salary.
National Insurance is a UK tax on earned income that funds the State Pension, the NHS, and a small group of contributory benefits. It is paid by employees, employers, and the self-employed under different rules. NI runs alongside income tax (you pay both from the same pay packet), but the two are calculated separately, apply to different income types, and go to different places. There is more detail on where the money ends up in our guide to what National Insurance goes towards. NI applies only to earned income and stops once you reach State Pension age.
The HMRC term for individual NI payments is ‘Class 1’, ‘Class 2’, ‘Class 3’, or ‘Class 4’ contributions, depending on whether you are an employee, self-employed, or paying voluntarily. Definition reference: gov.uk/national-insurance.
Yes. Despite the name, National Insurance is a tax in everything but label. It is set by Parliament, collected by HMRC, mandatory for those above the threshold, and not refundable. The ‘insurance’ framing dates from the 1911 National Insurance Act, when contributions were closer to a personal pot. Today, NI receipts go into the National Insurance Fund and pay current claimants, not into a savings account on your behalf.
The Office for Budget Responsibility, HM Treasury, and the Institute for Fiscal Studies all classify National Insurance as a tax in their official publications.
Employees, employers, and the self-employed all pay National Insurance, but under different rules. Employees (Class 1) pay NI on earnings above £12,570 per year, deducted automatically via PAYE. Employers pay a separate NI charge on top of wages. The self-employed pay Class 4 NI through Self Assessment. You stop paying NI entirely when you reach State Pension age.
You stop paying NI when you reach State Pension age, even if you keep working.
One thing worth knowing if you live in Scotland: NI rates and thresholds are identical across the whole UK. It is income tax that has separate Scottish bands, not National Insurance.
As an employee in 2026/27, you pay 8% NI on earnings between £12,570 and £50,270 per year, and 2% on earnings above £50,270. For example, on a £30,000 salary you pay 8% on £17,430, roughly £1,394 per year or £116 per month. Your employer also pays 15% on your earnings above £5,000, which does not reduce your take-home pay but is a separate cost to them.
| Your yearly earnings (2026/27) | Employee NI rate | Weekly / monthly equivalent |
|---|---|---|
| Below £6,708 | 0% | Under £129 a week |
| £6,708 to £12,570 | 0%, but the year still counts towards your NI record | £129 to £242 a week |
| £12,571 to £50,270 | 8% | £242 to £967 a week, or £1,048 to £4,189 a month |
| Above £50,270 | 2% | Over £967 a week |
For example: if you earn £30,000 a year, you pay 8% on £17,430 (the amount above £12,570). That works out at roughly £1,394 per year, or about £116 per month.
Your employer also pays 15% on your earnings above the Secondary Threshold (£5,000 per year in 2026/27), that doesn’t come out of your wages but it’s part of the total cost of employing you. There is a separate upper secondary threshold of £50,270 for employees under 21, apprentices, and qualifying veterans, so employers pay no NI on their earnings up to that point.
Almost nothing changed for employees this tax year. The thresholds are frozen, so as wages rise more of your pay drifts into the 8% band, which is the same slow squeeze that happens with the frozen income tax Personal Allowance.
Class 1 NI for employees is charged in two bands. The 2026/27 rates are:
Worked example for a £35,000 salary:
For a £65,000 salary, the calculation runs across both bands:
You can plug any salary into the take-home pay calculator to see the NI alongside income tax, pension, and student loan deductions.
No, you pay nothing below £12,570 a year. But there is a second threshold underneath that one which matters a lot if you are on part-time or term-time hours: the Lower Earnings Limit, which is £6,708 a year (£129 a week) in 2026/27. It went up from £6,500 (£125 a week) last year, and it is the only Class 1 figure that changed this April.
Earn at or above the Lower Earnings Limit but below £12,570 and you pay no National Insurance at all, yet the tax year still counts as a qualifying year on your NI record. Earn below the Lower Earnings Limit and the year does not count, unless you get National Insurance credits some other way, for example while claiming certain benefits or caring for someone.
That gap matters because qualifying years are what build your State Pension entitlement. Someone working a low-paid job for years can end up with free qualifying years without ever paying a penny of NI, while someone on a similar total income spread across several tiny jobs might get none, because the limit is applied per job rather than across all of them.
If you are self-employed, you pay Class 4 National Insurance at 6% on profits between £12,570 and £50,270, then 2% on profits above £50,270 in 2026/27. It is worked out on your profit, not your turnover, and you pay it through Self Assessment alongside your income tax rather than monthly through payroll.
Class 2 is the confusing one. Compulsory Class 2 contributions no longer exist. Instead, if your profits are at or above the Small Profits Threshold of £7,105 in 2026/27 (up from £6,845 last year), you are treated as having paid Class 2 and get the qualifying year for your NI record without paying anything. If your profits are below that, you can choose to pay voluntary Class 2 at £3.65 a week in 2026/27 (up from £3.50) to keep the year on your record.
Side hustles are where this catches people out. If you do freelance work alongside a job, the Class 4 bands apply to your self-employed profit separately from the NI already deducted from your wages, and both feed the same NI record. Only one qualifying year is earned per tax year no matter how many sources it comes from.
National Insurance contributions fund the State Pension, the NHS, and contributory benefits including Statutory Maternity Pay, Statutory Sick Pay, and contribution-based Jobseeker’s Allowance. You need 35 qualifying years of NI contributions to receive the full new State Pension (£241.30 per week in 2026/27) and at least 10 qualifying years to receive any State Pension at all.
Your NI contributions build up your entitlement to:
The money is not saved in an account with your name on it. NI receipts go into the National Insurance Fund and pay today’s pensioners and claimants, which is set out in more detail in our breakdown of what National Insurance goes towards. Your own retirement income is more likely to come from a workplace pension topped up by the State Pension, rather than the State Pension alone.
Income tax applies to almost all income, wages, savings interest, dividends, and rental income, and continues for life. National Insurance only applies to earned income from employment or self-employment, stops at State Pension age, and is nominally linked to specific benefits and the State Pension rather than going into general government revenue. Both are currently collected via PAYE and share the same £12,570 starting threshold.
The key differences:
Because NI only touches earned income, money you make from investments never attracts it. Interest and gains inside an ISA are free of both NI and tax, and profits on shares held outside an ISA fall under Capital Gains Tax rather than National Insurance.
Everyone gets a National Insurance number automatically at age 16 (it arrives in the post a few months beforehand). It’s unique to you, in the format AB 12 34 56 C, and tracks your contributions throughout your working life. You’ll need it for any job, and when claiming certain benefits.
You can find yours on your payslip, P60, or by logging into the HMRC app.
National Insurance contributions fund the State Pension, the NHS, and contributory benefits such as Jobseeker's Allowance and Maternity Allowance. Contributions go into the National Insurance Fund and are used to pay current claimants rather than being saved in a personal account on your behalf.
Both are collected by HMRC via PAYE, but they are separate taxes with different rules. Income tax is calculated on total income above the personal allowance. National Insurance is only charged on earned income (wages and self-employment profits) within a specific band, it does not apply to pension income, rental income, or savings interest.
No. Once you reach State Pension age you stop paying National Insurance entirely, even if you continue working. Pension income itself, whether from a workplace, private, or State Pension, is never subject to National Insurance contributions at any age.
Gaps in your NI record can reduce your eventual State Pension entitlement. However, you may receive National Insurance credits automatically during periods of unemployment, illness, or caring responsibilities. Voluntary Class 3 contributions can be used to fill gaps, speaking to a financial adviser can help assess whether this is worthwhile for your situation.
You need 35 qualifying years of National Insurance contributions or credits to receive the full new State Pension (£241.30 per week in 2026/27). You need at least 10 qualifying years to receive any State Pension at all. You can check your NI record and State Pension forecast on the gov.uk website.
Class 4 National Insurance is 6% on profits between £12,570 and £50,270, then 2% above £50,270, paid through Self Assessment. Compulsory Class 2 no longer exists: profits at or above the £7,105 Small Profits Threshold are treated as having paid it, and below that voluntary Class 2 costs £3.65 a week.
Possibly. Earning at or above the Lower Earnings Limit of £6,708 a year (£129 a week) in 2026/27 but below £12,570 means you pay no NI, but the year still counts on your NI record. Below the Lower Earnings Limit it does not count unless you receive National Insurance credits.
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