How National Insurance works
National Insurance (NI) is a tax on your earnings that funds the State Pension and other state benefits. Employees pay Class 1 NI, deducted through PAYE alongside Income Tax. The two taxes are calculated separately — NI is charged on your gross earnings, while Income Tax uses your Personal Allowance and tax bands.
For 2026/27 you pay no employee NI on earnings up to the Primary Threshold (£12,570 a year), then 8% on earnings between £12,570 and the Upper Earnings Limit (£50,270), and 2% on anything above £50,270.
2026/27 National Insurance rates
| Earnings band | Rate |
|---|---|
| Up to £12,570 (Primary Threshold) | 0% |
| £12,570 – £50,270 (Upper Earnings Limit) | 8% |
| Above £50,270 | 2% |
Class 1 employee rates and thresholds are frozen until at least April 2031, except the Lower Earnings Limit. GOV.UK — National Insurance contributions rates and allowances · 2026/27
Worked examples
Here is what a few typical salaries pay in employee NI for 2026/27:
| Annual salary | 8% band | 2% band | Total NI |
|---|---|---|---|
| £30,000 | £1,394.40 | £0 | £1,394.40 |
| £50,000 | £2,994.40 | £0 | £2,994.40 |
| £60,000 | £3,016.00 | £194.60 | £3,210.60 |
| £100,000 | £3,016.00 | £994.60 | £4,010.60 |
Notice that the 8% band is capped at £37,700 (the difference between the two thresholds), so someone earning £60,000 and someone earning £100,000 pay the same £3,016.00 in the 8% band — the extra earnings only attract 2% NI. This is why National Insurance is effectively capped, unlike Income Tax.
National Insurance and your State Pension
Every year you pay (or are credited with) National Insurance counts as a qualifying year toward the new State Pension. You generally need around 35 qualifying years to get the full amount, and fewer years to get a proportion. Even if you earn very little, your record still matters for retirement income.
National Insurance if you are self-employed
Self-employed people pay National Insurance differently: Class 4 at 6% on profits between £12,570 and £50,270 and 2% above that, plus a flat-rate Class 2 contribution. The calculator above covers employees (Class 1).