If you have ever looked at a payslip and asked “how much National Insurance do I pay, and why?”, you are not alone. National Insurance (NI) is one of the biggest deductions from UK earnings, yet it is far less understood than Income Tax. This guide uses the official 2026/27 figures from GOV.UK to show exactly what you pay, how it is calculated, and how to avoid paying more than you should.
In short: most employees pay 8% on earnings between £12,570 and £50,270 a year, and 2% above that. Self-employed people pay 6% and 2% Class 4 on profits. Employers pay 15% on top.
1. : What Is UK National Insurance and How Does It Work?
National Insurance is a UK payroll contribution that builds your entitlement to certain state benefits, most importantly the State Pension. It is separate from Income Tax, has its own thresholds and rates, and is paid by employees, employers and the self-employed.
1.1 What Does National Insurance Fund?
NI contributions pay for the State Pension, contributory benefits and part of the NHS. The contributory benefits include contribution-based Jobseeker’s Allowance, Employment and Support Allowance (ESA) and Maternity Allowance.
Unlike Income Tax, which goes into the general Exchequer pot, NI builds individual statutory entitlements. Your record decides whether you qualify for the full State Pension and some working-age benefits.
1.2 Who Is Required to Pay National Insurance?
You usually start paying NI at 16 if you earn above the Primary Threshold (£12,570 a year in 2026/27), and stop when you reach State Pension age. You must also be working in the UK, either as an employee or self-employed.
At what age do you stop paying National Insurance? You stop paying NI when you reach State Pension age, which is currently 66 and rising to 67 between 2026 and 2028. Check your exact date with the GOV.UK State Pension age checker.
Do I have to pay National Insurance if I am over State Pension age? Employees over State Pension age pay no NI, though their employer still pays. Self-employed people stop paying Class 4 from 6 April after they reach State Pension age.
2. National Insurance Rates & Thresholds for the 2026/27 Tax Year
For 2026/27 the main employee NI rate is 8%, the employer rate is 15%, and the Class 4 self-employed rate is 6%. The thresholds are unchanged from last year and are now frozen until April 2031.
All figures below are from GOV.UK’s rates and thresholds for 2026 to 2027, covering 6 April 2026 to 5 April 2027.
| Threshold | Weekly | Monthly | Annual |
|---|---|---|---|
| Lower Earnings Limit (LEL) | £129 | £559 | £6,708 |
| Primary Threshold (PT) | £242 | £1,048 | £12,570 |
| Secondary Threshold (ST, employer) | £96 | £417 | £5,000 |
| Upper Earnings Limit (UEL) | £967 | £4,189 | £50,270 |
| Class | Who pays | 2026/27 rate |
|---|---|---|
| Class 1 (employee) | Employees, PT to UEL | 8% |
| Class 1 (employee) | Employees, above UEL | 2% |
| Class 1 (employer) | Employers, above ST | 15% |
| Class 2 | Self-employed, voluntary or credit | £3.65 a week |
| Class 3 | Voluntary, to fill gaps | £18.40 a week |
| Class 4 | Self-employed, £12,570 to £50,270 | 6% |
| Class 4 | Self-employed, above £50,270 | 2% |
2.1 Key Legislative Changes & Rate Updates (2024–2026/27)
Since January 2024 the employee main rate has fallen from 12% to 8%, while the employer rate has risen from 13.8% to 15%. Class 2 contributions have also been reformed for the self-employed.
- January 2024: employee main rate cut from 12% to 10%.
- April 2024: employee main rate cut to 8%, Class 4 cut from 9% to 6%, and compulsory Class 2 payments abolished.
- April 2025: employer rate raised to 15%, the Secondary Threshold lowered from £9,100 to £5,000, and the Employment Allowance increased to £10,500.
- 2026/27: rates are unchanged. The Personal Allowance and the equivalent NI thresholds are being held until April 2031.
The Primary Threshold is aligned with the £12,570 Personal Allowance. Because both are frozen, pay rises push more income into tax and NI each year.
2.2 Current Threshold Breakdown (Primary Threshold, Upper Earnings Limit, Lower Earnings Limit)
The Lower Earnings Limit (£6,708) protects your record, the Primary Threshold (£12,570) is where you start paying, and the Upper Earnings Limit (£50,270) is where the rate drops to 2%. The Secondary Threshold (£5,000) is where employers start paying.
- LEL: earn at least this and you get a qualifying year without paying NI.
- PT: you pay 8% on earnings above it.
- UEL: earnings above it are charged at 2%.
- ST: employer pays 15% on earnings above it.
Many employers get relief through the Employment Allowance (£10,500 a year), which reduces their bill. Employers of staff under 21, apprentices under 25 and some veterans pay 0% up to £50,270.
3. How National Insurance Is Calculated: Demystifying Your Payslip
NI is calculated on your earnings in each pay period, not across the whole tax year. You pay 8% on pay between £1,048 and £4,189 a month, and 2% above £4,189 (£242 and £967 a week if paid weekly).
For example, on a salary of £2,500 a month: (£2,500 – £1,048) × 8% = £116.16. On £30,000 a year paid evenly, that is about £1,394 in NI.
3.1 Per-Pay-Period Calculation vs. Annual Income Tax Allowances
Income Tax is usually calculated cumulatively over the year, while NI is calculated afresh each pay period. NI therefore does not “catch up” if earlier months were below the threshold.
Is National Insurance deducted before or after Income Tax? NI is calculated on gross earnings and is not reduced by Income Tax. Both are deducted from your pay at the same time through PAYE.
Why does my payslip National Insurance not match online calculators? Calculators usually assume an even annual salary and a standard NI category. Your payslip uses the actual pay in that period, your pay frequency and your NI category letter, so small differences are normal.
3.2 Seasonal Workers, Part-Year Earnings & Cumulative Misconceptions
You can pay NI even when your total annual earnings are below £12,570, because the thresholds apply to each pay period. A high-paid month is taxed on its own.
Example: a seasonal worker earns £5,000 in one month and nothing else that year. NI for that month is (£4,189 – £1,048) × 8% plus (£5,000 – £4,189) × 2%, which is £267.50, even though the annual total is under £12,570. This often affects students, seasonal staff and people on career breaks.
Do I pay National Insurance if my income is below the personal threshold? If your pay in a period is below £1,048 a month (£242 a week), you pay no NI. If you earn between £559 and £1,048 a month you still get a qualifying year credit.
4. Employed National Insurance (Class 1 PAYE): Employee vs. Employer
Class 1 is the NI paid through payroll by both the employee (primary) and the employer (secondary). The employee’s share is deducted from pay, while the employer’s share is paid on top.
4.1 Employee (Primary) Class 1 Contributions
Employees in the standard category pay 8% between the Primary Threshold and Upper Earnings Limit, and 2% above it. Your employer deducts this automatically through PAYE.
NI appears on your payslip, and your employer reports and pays it to HMRC.
4.2 Employer (Secondary) Class 1 Contributions & Payslip Transparency
Employers pay 15% on each employee’s earnings above £5,000 a year (£417 a month). This is an extra cost to the employer and is not deducted from your wages.
Do I pay both employee and employer National Insurance? No. Your payslip may show both figures for transparency, but only the employee amount comes out of your pay. The employer amount is a separate cost to the company.
For a £30,000 salary, employer NI is 15% × (£30,000 – £5,000) = £3,750.
5. Self-Employed National Insurance: Class 2, Class 4, and Side Businesses
Self-employed people pay Class 4 NI on profits (not turnover) through Self Assessment, and Class 2 is no longer compulsory. You report profits on your tax return, and HMRC calculates the NI. For the wider sole trader picture, see our Self-Employed Tax Hub.
5.1 Class 2 and Class 4 Contribution Mechanics
Class 4 is 6% on profits between £12,570 and £50,270, and 2% above £50,270. Class 2 (£3.65 a week) is no longer compulsory, but you still get the qualifying year if profits are above the Small Profits Threshold.
Key figures for 2026/27:
- Small Profits Threshold: £7,105 a year. At or above this, you get a Class 2 credit automatically at no cost.
- Lower Profits Limit: £12,570. Class 4 starts here.
- Upper Profits Limit: £50,270. The rate drops to 2%.
Example: on £30,000 profit, Class 4 is 6% × (£30,000 – £12,570) = £1,045.80. On £60,000 profit, it is 6% × £37,700 plus 2% × £9,730 = £2,456.60.
If your profits are below £7,105 you do not have to pay, but you can pay Class 2 voluntarily (£189.80 for the year) to protect your State Pension record.
5.2 Employed + Self-Employed Side Business: Dual Income Rules
Yes, you can pay NI on both, but it is based on net profit after allowable expenses, not turnover. Class 1 is paid through your job and Class 4 through your tax return.
Do I pay National Insurance twice if I’m employed and self-employed? You pay Class 1 on your job and Class 4 on your side-business profit, but you are not taxed twice on the same income. If your combined Class 1 and Class 4 payments exceed the annual maximum, you can ask HMRC for a refund of the excess.
Because the Class 4 profit limit is £12,570 a year, a side business making £3,000 profit pays no Class 4. Expenses reduce profit, so keep good records. Your profit is still subject to Income Tax, which we cover in our Income Tax Guide.
6. Special Employment Edge Cases: Multiple Jobs, Directors, Bonuses & Overtime
Edge cases such as second jobs, director pay and bonuses can change how much NI you pay. The rules apply thresholds per employer or per pay period, so the answer is often not obvious.
6.1 Holding Multiple Part-Time Jobs
The thresholds are applied separately to each job, not to your combined income. If each job pays below £1,048 a month, you may pay no NI even if the total is higher.
How is National Insurance calculated if I have two jobs? Each employer calculates NI as if it were your only job. If your combined pay is high, you can overpay in total, and HMRC can refund the excess after the tax year, or you can apply to defer.
Example: two jobs paying £1,000 a month each means £0 NI in both, while one job paying £2,000 a month would cost £76.16.
To avoid overpaying, you can apply to defer NI on your second job using form CA72A. For 2026/27, HMRC must receive the application by 14 February 2027.
6.2 Company Directors: Annual Earnings Period Method
Directors usually pay Class 1 NI on an annual earnings period, using £12,570 and £50,270 for the whole year. This stops them from timing salary payments to avoid NI.
A director’s NI is calculated on cumulative pay in the tax year, not each pay period. Newly appointed directors have the thresholds pro-rated. Dividends are not subject to NI.
6.3 Bonuses, Overtime, Back Pay & Irregular Pay Spikes
Yes, you pay NI on bonuses, overtime and back pay, and a large lump sum can push you into the 2% band. The extra NI is calculated on the pay period in which it is paid.
Do you pay National Insurance on bonuses and overtime? Yes. Bonuses and overtime count as earnings, so NI is due at the same rates as normal pay.
Example: on a normal month’s pay of £3,000, NI is £156.16. If you receive a £4,000 bonus, total pay is £7,000 and NI is £307.50, so the bonus costs you £151.34 in NI.
Spreading a bonus across several months usually means more of it falls in the 8% band instead of the 2% band, so total NI is often higher, not lower. A single large payment is cheaper to the extent it exceeds £4,189 in the month. Back pay is normally assessed when it is paid, not in the period it relates to.
7. How to Reduce National Insurance: Pension Contributions & Salary Sacrifice
The only legal way to reduce NI on most employment income is through approved arrangements such as pension salary sacrifice. Ordinary pension contributions reduce Income Tax but not NI. Our Pension Calculator can show what a contribution is worth to you.
7.1 Salary Sacrifice vs. Relief at Source Workplace Pensions
Salary sacrifice saves both Income Tax and NI, while relief at source and net pay schemes save only Income Tax. In salary sacrifice, you agree to a lower salary and the employer pays the difference into your pension.
Example: if you sacrifice £2,400 a year at 8% NI, you save £192 in employee NI. Your employer saves £360 at 15%.
- Salary sacrifice: reduces gross pay, so saves Income Tax and NI.
- Relief at source: you pay from net pay and the provider claims basic rate tax, so there is no NI saving.
- Net pay arrangement: deducted before tax, but NI is still charged on the full pay.
Do pension contributions reduce my National Insurance? Only salary sacrifice does. Standard pension contributions reduce your taxable pay but not the pay used for NI.
Upcoming change: from April 2029, only £2,000 a year of employee pension contributions made through salary sacrifice will be exempt from NI. Anything above that will attract NI. Check your employer’s scheme and read the GOV.UK guidance on salary sacrifice changes from April 2029.
7.2 Employer Savings & Additional NI Tax-Free Benefits
Employers save 15% NI on salary they sacrifice, and many share part of that saving with staff. Salary sacrifice is also used for cycle-to-work and electric vehicle (EV) schemes, which can save NI as well as Income Tax. Your pay must stay above the National Minimum Wage after the sacrifice.
8. State Pension Qualifying Years, Record Gaps & Voluntary Contributions
NI contributions build your State Pension through qualifying years. You need 35 qualifying years for the full new State Pension (£241.30 a week in 2026/27) and at least 10 to get any.
8.1 Qualifying Years & The Full State Pension Requirement
You need 35 qualifying years for the full new State Pension and 10 for a reduced amount. Each qualifying year is worth about 1/35 of the full rate, roughly £6.89 a week.
How many qualifying years do I need for a full State Pension in the UK? You need 35 qualifying years of NI contributions or credits. If you were contracted out before 2016, you may need more.
A qualifying year is one where you earn at least the Lower Earnings Limit (£6,708), have enough credits, or paid voluntary contributions.
8.2 Working Past Full Qualification vs. Reaching State Pension Age
You cannot stop paying NI just because you have 35 qualifying years. You must keep paying until you reach State Pension age, as long as you are employed or self-employed.
Can I stop paying National Insurance once I have 35 years? No. NI is a legal requirement until State Pension age, even if your record is already full. Extra years do not increase a full new State Pension, but they may help fill gaps if some years are not valid.
8.3 Checking Your Record, National Insurance Credits, and Voluntary Class 3 Contributions
You can check your NI record online through your Personal Tax Account or the HMRC app. Gaps can often be filled by buying voluntary contributions, for up to six tax years back.
How do I check my National Insurance record online? Sign in to your GOV.UK Personal Tax Account or the HMRC app, or use the GOV.UK “Check your National Insurance record” service. You can also get a State Pension forecast.
What happens if I have gaps in my National Insurance record? A gap year does not count towards your State Pension, which may reduce your payout. You can often fill gaps with voluntary Class 3 contributions or by claiming credits.
Common NI credits are automatically given for:
- Child Benefit for a child under 12
- Carer’s Allowance
- Jobseeker’s Allowance and some Universal Credit claims
- Statutory maternity, paternity and adoption pay
Voluntary Class 3 contributions cost £18.40 a week (£956.80 for a full year) in 2026/27 and can be paid within six tax years. Each qualifying year adds about £358 a year to a full-rate pension, so a gap can pay back in under three years. Check your State Pension forecast first, because not every gap needs filling. You apply using form CA5603 or online.
9. Overpaid National Insurance: Checking, HMRC Claims & Refunds
If you have overpaid NI, you can usually get it back, either through your employer or by claiming from HMRC. Check your payslips, P60 and NI category first.
9.1 Common Causes of NI Overpayment
The most common causes are having more than one job, being on the wrong NI category letter, and paying NI after State Pension age. Payroll errors are also a regular cause.
- Multiple jobs where combined pay exceeds the annual maximum
- Wrong category letter on your payslip
- Reaching State Pension age mid-year without the employer switching category
- Payroll errors, such as wrong tax year settings
9.2 Claiming Your Refund: Automatic HMRC Reconciliations vs. Manual Applications
Ask your employer to correct a payroll error first, and use HMRC’s refund service if they cannot, or if you had more than one job. HMRC does not usually refund NI automatically.
How do I claim a refund for overpaid National Insurance from HMRC? Use the GOV.UK Claim a National Insurance refund service and have your P60s or final payslips ready. HMRC normally deals with multiple-job claims after the tax year ends.
Note that a P800 is an Income Tax calculation, so do not rely on it to find NI overpayments. Also, CA5603 is the voluntary Class 3 application form, not a refund form. For the self-employed, Class 4 refunds use the online service or form CA5610.
Ready to check your own figures? Use our free Tax & Payslip Checker to see your NI, tax and take-home pay in seconds. If your situation is more complex, you can also book a Financial Planning Consultation.
10. Frequently Asked Questions (PAA & Edge Case Summary)
At what age do you stop paying National Insurance?
You stop paying NI when you reach State Pension age, currently 66 and rising to 67 between 2026 and 2028. Employers still pay NI on your earnings.
Do I have to pay National Insurance if I am over State Pension age?
No, employees over State Pension age do not pay NI. The self-employed stop paying Class 4 from the next 6 April.
How many qualifying years do I need for a full State Pension in the UK?
You need 35 qualifying years for the full new State Pension, and at least 10 for any. Contracted-out years before 2016 may mean you need more.
How do I check my National Insurance record online?
Sign in to your Personal Tax Account on GOV.UK or the HMRC app and open “Check your National Insurance record”. You can also check your State Pension forecast there.
What happens if I have gaps in my National Insurance record?
Gap years do not count towards your State Pension, so you may get less. You can fill gaps with voluntary contributions for up to six tax years back, or you may be entitled to credits.
Is National Insurance deducted before or after Income Tax?
NI is calculated on your gross pay and is not reduced by Income Tax. Both are taken from your pay at the same time through PAYE.
Why does my payslip National Insurance not match online calculators?
Calculators often assume even annual pay, while payroll uses each period’s actual pay, your category letter and rounding. Bonuses, overtime and pay frequency are the most common reasons.
Do I pay National Insurance if my income is below the personal threshold?
Not if your pay in each period is below £242 a week or £1,048 a month. You can still pay if one period is high, even if the annual total is below £12,570.
How is National Insurance calculated if I have two jobs?
Each employer applies the thresholds separately, as if it were your only job. If your combined NI is too high, you can claim a refund after the tax year or apply to defer.
Do you pay National Insurance on bonuses and overtime?
Yes. Bonuses and overtime count as earnings, and NI is calculated on the total pay in that period.
Do I pay National Insurance twice if I’m employed and self-employed?
You pay Class 1 on your job and Class 4 on your self-employed profit, but these are different classes on different income. If the combined total is too high, you can claim a refund of the excess.
How do I claim a refund for overpaid National Insurance from HMRC?
Ask your employer to correct it first. If they cannot, or if you had multiple jobs, use the GOV.UK refund service with your P60s or payslips.
This guide is general information for the 2026/27 tax year and is not personal financial advice. Rates and rules can change, so always check GOV.UK or speak to a qualified adviser for your situation.
