National Insurance Explained: 2026/27 Rates, Thresholds and How to Calculate It

Class 1 National Insurance thresholds for 2026/27

These are the official HMRC figures used by payroll software. Your employer applies the weekly or monthly figure depending on how often you are paid.

Employee and employer rates

• Employee (category A): 0% up to the Primary Threshold, 8% between the Primary Threshold and the UEL, 2% above the UEL.
• Employer: 15% on earnings above the Secondary Threshold (£5,000 a year). The rate rose from 13.8% and the threshold fell from £9,100 in April 2025.
• Employer relief: 0% up to £25,000 for staff under 21, apprentices under 25 and eligible veterans in their first year of civilian work.
• Employment Allowance: eligible employers can reduce their annual employer NI bill by up to £10,500.
• Over State Pension age: no employee NI (category C), but the employer still pays.

How to calculate National Insurance: step by step

Step 1: take your gross pay for the period (after any salary sacrifice, but before income tax and pension contributions made under a net pay arrangement). Step 2: subtract the Primary Threshold. Step 3: multiply earnings up to the UEL by 8% and anything above by 2%.

Monthly example, £2,500 a month: £2,500 minus £1,048 is £1,452. £1,452 x 8% = £116.16 NI for the month.

Annual example, £60,000 salary: (£50,270 minus £12,570) x 8% = £3,016, plus (£60,000 minus £50,270) x 2% = £194.60. Total employee NI £3,210.60.

Employer NI on a £30,000 salary: (£30,000 minus £5,000) x 15% = £3,750 a year. At £50,000 it is £6,750. Our employer NI calculator handles the allowances.

Why NI is per pay period, not annual

Income tax under PAYE is normally cumulative across the tax year. Employee NI is not: each week or month stands alone. If you earn £800 one month and £3,000 the next, you pay no NI in the first month and full NI in the second, with no annual balancing. Company directors are the exception, as they use an annual earnings period.

This is why a large bonus month can result in less NI than the same amount spread out: more of it falls above the monthly UEL of £4,189 and is charged at only 2%.

NI for the self-employed and your State Pension

Self-employed people pay Class 4 NI at 6% on profits between £12,570 and £50,270 and 2% above. Compulsory Class 2 contributions were abolished from April 2024; those with profits under the small profits threshold can pay voluntarily to protect their State Pension record.

You build a qualifying year for the State Pension once your earnings reach the Lower Earnings Limit (£6,708 for 2026/27), even though you pay no NI until £12,570. You normally need 35 qualifying years for the full new State Pension.

NI category letters on your payslip

Your payslip shows a category letter that tells payroll which rates to use. Check it is right, because a wrong letter means wrong deductions.

Two jobs means two sets of thresholds

Each employer works out NI separately, so two jobs can mean less NI than one job with the same total pay, or more.

Someone with two £30,000 jobs pays £1,394.40 NI on each, a total of £2,788.80. With one £60,000 job they would pay £3,210.60. The two-job worker gets the £12,570 primary threshold twice, but none of their pay drops to the 2% rate because neither job reaches the upper earnings limit. Once both jobs pay above the upper earnings limit, too much 8% NI can be taken overall. HMRC refunds any excess over the annual maximum after the tax year, or you can apply in advance to defer NI on one job, which is what category letter J on a payslip means.

Qualifying years without paying: NI credits

You can build your State Pension record in years when you pay no NI, through credits. Some are given automatically and some you have to apply for. This matters because you need 10 qualifying years for any new State Pension and 35 for the full £241.30 a week.

Filling gaps with voluntary contributions

If your record has gaps, you can usually pay voluntary contributions for the past 6 tax years. The deadline is 5 April each year, so gaps in 2025/26 can be filled until 5 April 2032.

The self-employed with low profits can pay voluntary Class 2 at £3.65 a week. Everyone else pays Class 3 at £18.40 a week, which is £956.80 for a full year. As a rough guide, one extra qualifying year adds about 1/35 of the full new State Pension, about £358 a year at 2026/27 rates. That means a Class 3 year can pay for itself in under three years of retirement.

Do not pay before checking your State Pension forecast. An extra year only helps if it actually raises your pension, which it will not if you are already on course for the full amount. People who were contracted out before April 2016 may need more than 35 years to reach the full rate, so check the forecast rather than counting years.

Common NI mistakes on payslips

• Category letter A after State Pension age: you should be on C with no employee NI. Show your employer proof of age.
• Under-21s or apprentices on letter A: this does not change your own NI, but your employer is paying 15% it may not owe.
• Assuming a net pay pension cuts NI: only salary sacrifice reduces NI. Net pay and relief at source save income tax only.
• Expecting an annual refund after an uneven year: employee NI is worked out pay period by pay period and is not reconciled across the year. The exception is people with several jobs who pay more than the annual maximum.