How National Insurance works
National Insurance (NI) is a separate contribution from income tax that funds specific state benefits — the State Pension, contribution-based Jobseeker's Allowance, Maternity Allowance, and bereavement benefits. It also builds your entitlement to the State Pension: you need 35 qualifying years to receive the full new State Pension, and at least 10 to receive any.
Unlike income tax, NI only applies to earned income — not to savings, dividends, rental income, or pensions in retirement. It is also per-job: each employment is assessed separately against the thresholds, which can matter if you have two jobs. Employees pay Class 1 primary contributions via PAYE; self-employed workers pay Class 4 on profits through self-assessment, plus a flat weekly Class 2 charge once profits exceed the small profits threshold.
2026/27 NI rates for employees
Employee (Class 1 primary) NI applies to weekly or monthly earnings over the primary threshold. Here are the annual equivalents for 2026/27:
| Earnings band | Annual range | Rate |
|---|---|---|
| Below primary threshold | Up to £12,570 | 0% |
| Main rate | £12,571 – £50,270 | 8% |
| Above upper earnings limit | Over £50,270 | 2% |
Like income tax, each slice is charged at its own rate — you only pay 2% on the portion above £50,270, not on your whole salary.
NI for self-employed
Self-employed workers pay National Insurance through the annual self-assessment return, split into two classes.
Class 4 is profit-based and calculated on the same thresholds as employees, but at lower rates: 6% on annual profits between £12,570 and £50,270, and 2% on profits above £50,270.
Class 2 is a flat rate of £3.45 per week (£179.40 per year). It's no longer compulsory to pay Class 2 in most cases, but once profits exceed the small profits threshold of £12,570 it's treated as payable and gives you a qualifying year towards the State Pension automatically. Traders with profits below the threshold can still pay Class 2 voluntarily to protect their contribution record.
Employer National Insurance
Employers also pay secondary Class 1 NI on top of employee salaries. From April 2025, the rate is 15% on every pound above a £5,000 secondary threshold. This is a real cost of employing someone in the UK and is often bundled into the overall “cost of employment” figure — see the employer cost calculator for a full breakdown including employer pension contributions.