National Insurance Explained
National Insurance is the second deduction on your payslip after income tax. Here are the 2026/27 rates, who pays them, and how they change your take home pay.
Every UK payslip shows two big deductions: income tax and NI. Most people understand the first and ignore the second. That is a mistake, because NI can take well over a thousand pounds a year from an average salary. This guide explains how National Insurance works for employees in the 2026/27 tax year, from 6 April 2026 to 5 April 2027.
What National Insurance is
NI is a tax on your earnings that builds your right to the State Pension and certain benefits, such as contribution based Jobseeker’s Allowance. Unlike income tax, which funds general government spending, your NI record is personal. Gaps in it can reduce what you receive later, which is why the system tracks your contributions through your NI number.
Who pays it
You pay employee NI, known as Class 1, if you are 16 or over, employed, and earn more than £242 a week from one job. That is about £1,048 a month or £12,570 a year. Earn between £129 and £242 a week and you pay nothing, but your record is still treated as paid so your State Pension is protected. Earn less than that and you can choose to pay voluntary contributions to fill the gap. You stop paying Class 1 when you reach State Pension age, even if you keep working. If you are self employed, different classes apply: for 2026/27, Class 4 charges 6% on profits between £12,570 and £50,270 and 2% above that.
How it is collected
Like income tax, employee NI is collected through payroll. Each payday your employer works out what you owe for that pay period and deducts it before the money reaches you. Your payslip shows the amount on its own line. Because it is worked out per pay period, a one off bonus or overtime can push one month’s deduction up without affecting the rest of the year. Directors of limited companies are treated slightly differently and may pay in a lump rather than each payday, but the rates are the same.
The 2026/27 employee rates
For 2026/27, the Class 1 rates for most employees are simple. You pay 8% on earnings between £12,570 and £50,270 a year, and 2% on everything above £50,270. In weekly terms, that is 8% on pay between £242 and £967 a week, and 2% above £967.
| Earnings | Rate |
|---|---|
| Up to £12,570 a year | 0% |
| £12,570 to £50,270 a year | 8% |
| Over £50,270 a year | 2% |
What the rates mean in practice
On a £25,000 salary, 8% of the £12,430 above the threshold gives £994.40 a year, or £82.87 a month. On a £40,000 salary, 8% of £27,430 gives £2,194.40 a year, or £182.87 a month. Nobody earning under £50,270 touches the 2% rate, so for most employees the whole calculation is a single 8% slice.
Worked example: NI on a £30,000 salary
On a £30,000 salary, the first £12,570 is free of NI. The remaining £17,430 is charged at 8%, which comes to £1,394.40 for the year, or £116.20 a month. Add the £3,486 of income tax on the same salary and total deductions reach £4,880.40, leaving £25,119.60 of take home pay. You can see the full picture on our £30,000 after tax page.
NI vs income tax
The two deductions look similar but work differently. Income tax has a personal allowance of £12,570 and rates of 20%, 40% and 45%. NI starts at the same £12,570 for employees, but charges 8% then 2%, with no higher bands. That is why it takes a smaller bite than income tax on most salaries. Read how UK income tax works to compare the two side by side. The figures on this site always show both deductions together.
Checking your record
Your NI number stays the same for life, and you can check your contributions record through your Personal Tax Account on GOV.UK. It is worth a look if you have had career breaks, time abroad, or years of low earnings, since missing years can sometimes be filled with voluntary contributions. You need 35 qualifying years for the full new State Pension, so every recorded year matters.
Common questions
£1,394.40 for 2026/27. You pay 8% on the £17,430 of earnings between £12,570 and £50,270.
Income tax funds general government spending, while NI builds your entitlement to the State Pension and some benefits. They are calculated separately, with different thresholds.
Employees stop paying Class 1 when they reach State Pension age. Income tax can still apply after that age.
No. NI is charged on earnings from a job and on self employed profits, not on pension income or savings. Income tax may still apply to those.
Related guides:
UK income tax
Student loan repayments
How we calculate