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.
Employer National Insurance is a separate cost
Your payslip shows your own Class 1 employee NI, but your employer also pays National Insurance on your earnings — the employer (secondary) rate is 13.8% above the secondary threshold. This is part of your total employment cost, not a deduction from your take-home pay, which is why the salary calculator does not subtract it.
It matters for planning because it is one reason employers offer salary-sacrifice pension schemes: by paying pension contributions from gross pay, both your employee NI and the employer's NI bill can fall. The same HMRC rates table sets the employee thresholds and the employer rate.
Self-employed people are treated differently — Class 4 NIC is charged at 6% on profits between the lower and upper profits limits and 2% above, plus a flat-rate Class 2 payment. The calculator on this page covers Class 1 employees only.
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).
Frequently asked questions
Is National Insurance the same as Income Tax?
Does National Insurance count towards my pension?
Why do I pay less NI above £50,270?
Will National Insurance rates change soon?
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