How National Insurance Works in the UK in 2026/27
National Insurance is separate from Income Tax, but it still affects your take-home pay. Here are the current 2026/27 NI rates, examples, classes, and State Pension links.
National Insurance is separate from Income Tax, but for employees it feels similar because it comes out of pay through PAYE. The big difference is that NI also helps build entitlement to the State Pension and some contribution-based benefits.
This guide uses 2026/27 rates and examples. For your own salary, use the PayeTax calculator.
Quick Summary
| Question | 2026/27 answer |
|---|---|
| Who pays employee NI? | Employees over the Primary Threshold |
| Main employee rate | 8% between £12,570 and £50,270 |
| Upper employee rate | 2% above £50,270 |
| Employer NI | 15% above the secondary threshold for standard category A employees |
| Lower Earnings Limit | £6,708 for employee NI credits |
| Full new State Pension | £241.30 a week in 2026/27 |
| Can you opt out? | No, if NI is due on your earnings |
Employee National Insurance
Most employees are category A. For 2026/27, category A employee NI is:
| Annual earnings band | Employee NI rate |
|---|---|
| Up to £12,570 | 0% |
| £12,570 to £50,270 | 8% |
| Above £50,270 | 2% |
That means NI rises quickly in the main band, then more slowly once pay is above the upper earnings limit.
Employer National Insurance
Employer NI is paid by the employer on top of gross salary. For a standard category A employee in 2026/27, the employer rate is 15% above the secondary threshold.
This matters for salary negotiations, salary sacrifice, and director pay planning because employer NI is a real company cost even though it does not appear as a deduction from your payslip.
For example, on a £50,000 salary:
- Employee NI is about £2,994.
- Employer NI is about £6,750.
- Total NI connected with the employment is about £9,744.
Employee NI Examples
These examples use the 2026/27 category A employee thresholds.
| Annual salary | Employee NI | Approx monthly NI |
|---|---|---|
| £20,000 | £594 | £50 |
| £30,000 | £1,394 | £116 |
| £40,000 | £2,194 | £183 |
| £50,000 | £2,994 | £250 |
| £60,000 | £3,211 | £268 |
| £80,000 | £3,611 | £301 |
| £100,000 | £4,011 | £334 |
These are annualised examples. Payroll normally calculates NI by pay period, so uneven pay, bonuses, or mid-year job changes can affect payslip deductions.
NI Compared with Income Tax
| Area | Income Tax | National Insurance |
|---|---|---|
| Main threshold | Personal Allowance | Primary Threshold |
| Main rate in basic band | 20% | 8% for category A employees |
| Rate above £50,270 | 40% Income Tax for most UK taxpayers outside Scotland | 2% employee NI |
| Savings and dividends | Can be taxed | Not employee NI earnings |
| State Pension record | Does not build it | Can build qualifying years |
| Employer cost | No employer Income Tax | Employer NI can apply |
At £50,270, the employee NI rate drops from 8% to 2%, while Income Tax usually moves from basic rate to higher rate.
Self-Employed National Insurance
Self-employed NI uses different rules.
For 2026/27:
| Class | Who it affects | 2026/27 position |
|---|---|---|
| Class 2 | Self-employed people | Treated as paid if profits are at least £7,105; voluntary Class 2 is £3.65 a week if profits are lower |
| Class 4 | Self-employed profits | 6% from £12,570 to £50,270, then 2% above £50,270 |
| Class 3 | Voluntary contributions | £18.40 a week for many voluntary gap-filling cases |
Example Class 4 amounts:
| Self-employed profit | Class 4 NI |
|---|---|
| £30,000 | £1,046 |
| £50,000 | £2,246 |
| £70,000 | £2,657 |
| £100,000 | £3,257 |
Self-employed NI can be lower than employee NI, but self-employed people also miss out on employee rights, employer pension contributions, statutory sick pay, and other employment protections.
State Pension and NI Credits
Your NI record affects State Pension entitlement. Under current rules, you usually need:
- 10 qualifying years for any new State Pension.
- 35 qualifying years for the full new State Pension.
- The full new State Pension is £241.30 a week in 2026/27.
For employees, a qualifying year can be built when earnings are above the Lower Earnings Limit. For 2026/27, that is £6,708 a year. Certain benefits and caring responsibilities can also create NI credits.
Check your record through GOV.UK rather than assuming payroll has always been reported correctly:
Voluntary Contributions
Voluntary NI contributions can fill gaps in your record, but they are not automatically worth paying. The value depends on your current record, age, State Pension forecast, and whether the year would actually increase your pension.
Before paying Class 3 or voluntary Class 2:
- Check your NI record.
- Check your State Pension forecast.
- Confirm which years can still be filled.
- Ask HMRC or the Future Pension Centre whether paying will increase your pension.
Salary Sacrifice and NI
Salary sacrifice can reduce NI because it lowers the salary used for payroll before NI is calculated.
For example, reducing a £50,000 salary to £45,000 through salary sacrifice saves about £400 of employee NI in 2026/27, because the sacrificed £5,000 would otherwise sit in the 8% NI band.
Ordinary pension contributions that are not salary sacrifice usually get Income Tax relief, but they do not reduce employee NI in the same way.
Read more in the salary sacrifice guide.
Common NI Checks
- Check your payslip NI category letter is right.
- Check your NI record each year.
- Check whether salary sacrifice is available before comparing pension options.
- If you have more than one job, watch for overpayments or deferment issues.
- If you are over State Pension age and still working, check payroll has stopped employee NI.
- If you are a company director, remember director NI can be calculated on an annual basis.
Frequently Asked Questions
What is National Insurance?
National Insurance is a contribution system separate from Income Tax. Employees, employers, and self-employed people can pay it, and it helps build entitlement to the State Pension and some contribution-based benefits.
How much NI do I pay on £40,000?
On a £40,000 category A employee salary in 2026/27, employee NI is about £2,194 a year, or about £183 a month on an annualised basis.
Do pension contributions reduce NI?
Salary sacrifice pension contributions can reduce NI because they lower gross pay before payroll tax is calculated. Ordinary pension contributions usually do not reduce NI.
How many NI years do I need for State Pension?
You usually need 10 qualifying years for any new State Pension and 35 qualifying years for the full new State Pension. Check your own record because transitional rules can affect individuals.
Can I opt out of NI?
No. If NI is due on your earnings, you cannot opt out. You can sometimes reduce NI through salary sacrifice or by correcting payroll category errors.
Sources
- GOV.UK: National Insurance
- GOV.UK: Rates and thresholds for employers 2026 to 2027
- GOV.UK: Self-employed National Insurance rates
- GOV.UK: Voluntary National Insurance rates
- GOV.UK: Benefit and pension rates 2026 to 2027
This guide is for general information only. It is not tax, payroll, pensions, or financial advice. Check GOV.UK, HMRC, your payroll provider, or a qualified adviser for your own position.
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