National Insurance is one of the UK’s most widely paid taxes, but it is rarely understood clearly. Most people see it as a line on their payslip or tax return. The system runs deeper than that. NI determines whether you build a State Pension record, affects the cost of hiring staff, and works differently depending on whether you are employed, self-employed, or outside the workforce entirely.
This hub covers the 2026/27 NI rates for employees and the self-employed, the employer NI changes that took effect in October 2024, how NI credits protect your qualifying years, and how NI connects to your State Pension entitlement.
For the broader tax context, return to the main Tax section. For how NI feeds into retirement income, use the State Pension hub.
National Insurance Rates at a Glance — 2026/27
Employee NI (Class 1)
| Earnings per year | NI rate |
|---|---|
| Below £6,396 (Lower Earnings Limit) | 0% — no NI, no qualifying year |
| £6,396 – £12,570 | 0% — no NI, but qualifying year is credited |
| £12,570 – £50,270 (Primary to Upper Earnings Limit) | 8% |
| Above £50,270 | 2% |
The key thresholds in weekly and monthly terms:
| Threshold | Annual | Monthly | Weekly |
|---|---|---|---|
| Lower Earnings Limit | £6,396 | £533 | £123 |
| Primary Threshold | £12,570 | £1,048 | £242 |
| Upper Earnings Limit | £50,270 | £4,189 | £967 |
Employer NI (Class 1 Employer)
| Earnings per employee | Employer NI rate |
|---|---|
| Up to £5,000 (Secondary Threshold) | 0% |
| Above £5,000 | 15% |
The Employment Allowance (£10,500 for 2026/27) reduces employer NI bills for eligible businesses. Note: companies where the director is the sole employee cannot claim the Employment Allowance.
Self-Employed NI (Class 4)
| Profits per year | Class 4 NI rate |
|---|---|
| Below £6,725 (Small Profits Threshold) | 0% — no NI and no automatic qualifying year |
| £6,725 – £12,570 | 0% — no NI, but NI credit awarded |
| £12,570 – £50,270 | 6% |
| Above £50,270 | 2% |
Class 2 NI was abolished from April 2024. Self-employed people no longer pay the flat-rate weekly Class 2 contribution, but NI credits for State Pension purposes are still awarded automatically if profits exceed the Small Profits Threshold.
Worked Example: Employee NI
Scenario: Sam earns £35,000 in 2026/27.
- Earnings below Primary Threshold: £12,570 — no NI payable
- Earnings between £12,570 and £35,000: £22,430 × 8% = £1,794.40 employee NI
Sam’s employer pays NI on earnings above the £5,000 Secondary Threshold:
- £35,000 − £5,000 = £30,000 × 15% = £4,500 employer NI
Sam sees £1,794.40 deducted from her pay. Her employer pays a further £4,500 that never appears on her payslip — making the true cost of her employment £39,500.
Worked Example: Self-Employed NI
Scenario: Marcus runs a sole trader business with £28,000 in taxable profits for 2026/27.
- Profits below £12,570: no NI
- Profits between £12,570 and £28,000: £15,430 × 6% = £925.80 Class 4 NI
This is paid through his Self Assessment return. He also receives a qualifying year for State Pension purposes without any additional Class 2 payment.
The Employer NI Hike: October 2024 Changes
The October 2024 Budget introduced two changes that significantly increased employer costs:
- The employer NI rate rose from 13.8% to 15%
- The Secondary Threshold dropped from £9,100 to £5,000
The combined effect is substantial. For a full-time employee on £25,000:
| Before (2024/25) | After (2025/26 onwards) | |
|---|---|---|
| Threshold | £9,100 | £5,000 |
| Rate | 13.8% | 15% |
| Employer NI | £2,191 | £3,000 |
| Extra cost | — | +£809 per employee |
For industries with large lower-wage workforces — hospitality, retail, care — this has been material. The Employment Allowance rising from £5,000 to £10,500 partially offset this for smaller employers, but businesses with larger payrolls or single-director companies (who cannot claim it) absorb the full increase.
NI Credits: Protecting Your Record When You Are Not Working
NI is not only about what you pay while employed or self-employed. It is also about building 35 qualifying years for the full State Pension. If you are not working, caring, or earning below the Lower Earnings Limit, the question becomes whether you are receiving NI credits instead.
Who gets NI credits automatically:
- Parents claiming Child Benefit for a child under 12
- Carers receiving Carer’s Allowance
- People on Universal Credit, Employment and Support Allowance, or Jobseeker’s Allowance
Who can apply for NI credits:
- Parents of children under 12 who are not the Child Benefit claimant (Specified Adult Childcare credits)
- Registered Foster Carers
- People who were ill or caring but did not claim a qualifying benefit at the time
What happens if you miss a qualifying year: You can pay voluntary Class 3 NI contributions to fill gaps in your record. For 2026/27, Class 3 contributions cost £17.75 per week (£923 for a full year). Given that one extra qualifying year adds roughly £329 per year to your State Pension for life, filling recent gaps is usually worthwhile — but you should check your forecast first.
Check your NI record and State Pension forecast at gov.uk: Check Your State Pension Forecast.
The State Pension Connection
You need 35 qualifying years for the full new State Pension. The current full new State Pension is £11,502.40 per year (2026/27). You need a minimum of 10 qualifying years to receive anything at all.
Each qualifying year adds roughly £328.64 to your annual State Pension (£11,502.40 ÷ 35).
This is why NI is not just a payroll tax — it is also a savings mechanism. Years out of work or on low pay, where credits are not received, permanently reduce State Pension entitlement unless gaps are filled by voluntary contributions later.
For the full retirement planning picture, use the State Pension hub.
What This Cluster Covers
| Your question | Best starting point |
|---|---|
| How does NI work overall? | National Insurance Guide |
| Current rates and thresholds? | NI Rates 2026/27 |
| Shortest usable summary? | NI Rates Quick Reference |
| Plain English — what is NI for? | National Insurance Explained |
| Gaps in my NI record? | National Insurance Credits |
| Employer costs and budgeting? | Employer NI Costs |
| Find my NI number? | Find Your NI Number |
Related Hubs
- State Pension hub — how qualifying years translate into retirement income
- Income Tax hub — how NI and income tax interact on take-home pay
- Self Assessment hub — how self-employed people pay Class 4 NI
- Take-Home Pay hub — calculators showing NI deductions alongside income tax
- Limited Company hub — director NI strategy and employer NI planning