National Insurance Explained: 2026/27 Rates and Thresholds

National Insurance is the second-largest deduction on a typical UK payslip, and unlike income tax it applies the same rates across the whole UK, including Scotland. It funds contributory benefits such as the State Pension, and building a contribution record is what earns you entitlement to them.

What employees pay in 2026/27

Employees pay Class 1 National Insurance on earnings, calculated per pay period rather than annually:

Note the shape: unlike income tax, NI gets cheaper at the margin once you pass £50,270. That is why the combined marginal deduction for a basic-rate taxpayer is 28% (20% tax plus 8% NI) but only 42% for a higher-rate taxpayer (40% plus 2%).

The employer side you never see

Your employer also pays employer National Insurance at 15% on most of your salary. It never appears on your payslip, but it shapes pay decisions: when you negotiate a £1,000 raise, it costs your employer about £1,150. This is also the mechanism that makes salary sacrifice attractive to employers, since sacrificed salary avoids employer NI too, and some employers share that saving with staff.

NI and income tax play by different rules

• NI is charged per pay period. A one-off bonus month can attract more NI than the same money spread across the year, because the 8% band is applied monthly.
• NI stops at State Pension age. Income tax does not.
• NI applies only to earned income. Savings interest, dividends and rental income escape it entirely.
• Pension contributions made by salary sacrifice reduce NI; relief-at-source contributions do not.

A worked example

On a £35,000 salary, you pay nothing on the first £12,570 and 8% on the remaining £22,430, which is £1,794 a year or about £150 a month. On £60,000, you pay 8% on the £37,700 between the thresholds (£3,016) plus 2% on the £9,730 above £50,270 (£195), around £3,211 in total. Run your own figure through the salary calculator to see income tax and NI side by side.

Your contribution record matters

You normally need 35 qualifying years of contributions or credits for the full new State Pension, and at least 10 years to get anything. Years spent earning below the threshold, caring, or out of work can leave gaps, though credits often fill them automatically. You can check your record and forecast in minutes through your personal tax account on GOV.UK, and filling recent gaps voluntarily is sometimes exceptional value.