National Insurance 2025/26: Rates, Thresholds & How It Works

National Insurance (NI) is the UK's second income tax in all but name. It's deducted from your wages alongside income tax, but has its own rates, thresholds, and rules. Understanding how NI works is essential for knowing your true take-home pay — and for planning your pension and retirement.

What Is National Insurance?

National Insurance contributions (NICs) fund the state pension, NHS, and welfare system. Unlike income tax (which goes into the general Treasury pot), NI contributions build your entitlement to specific benefits:

State Pension — You need 35 qualifying years for the full amount
Maternity Allowance — Available to employees and self-employed who've paid enough NI
Bereavement Support Payment — Depends on the deceased's NI record
Jobseeker's Allowance (contribution-based) — Requires NI contributions in the relevant years
Employment and Support Allowance — Similar NI requirements

Most employees pay Class 1 NI, which is automatically deducted from your salary by your employer.

Employee NI Rates for 2025/26

For employees under state pension age (currently 66):

Earnings Per Year	Earnings Per Month	NI Rate
Up to £12,570	Up to £1,048	0% (below Primary Threshold)
£12,571 – £50,270	£1,048 – £4,189	8%
Over £50,270	Over £4,189	2% (Upper Earnings Limit)

If you're over state pension age, you pay no employee NI at all, regardless of how much you earn. This is one of the key differences between NI and income tax — you'll still pay income tax on earnings after retirement, but NI stops.

The Lower Earnings Limit

There's an important threshold below the Primary Threshold: the Lower Earnings Limit (LEL) at £6,396/year (£533/month). If you earn between the LEL and the Primary Threshold, you don't pay any NI but you still get a qualifying year for state pension purposes. This is "zero-rate" NI — you're treated as having paid.

Worked Examples

Example 1: £30,000 Salary

First £12,570: £0 (below threshold)
£12,571 to £30,000 = £17,430 at 8% = £1,394.40
Total NI: £1,394.40/year (£116.20/month)

See the full £30,000 salary breakdown

Example 2: £50,000 Salary

First £12,570: £0
£12,571 to £50,000 = £37,430 at 8% = £2,994.40
Total NI: £2,994.40/year (£249.53/month)

See the full £50,000 salary breakdown

Example 3: £80,000 Salary

First £12,570: £0
£12,571 to £50,270 = £37,700 at 8% = £3,016.00
£50,271 to £80,000 = £29,730 at 2% = £594.60
Total NI: £3,610.60/year (£300.88/month)

See the full £80,000 salary breakdown

Employer NI Contributions

Your employer pays NI on top of your salary — this doesn't appear on your payslip as a deduction, but it's a real cost of employing you.

Earnings Per Year	Employer NI Rate (2025/26)
Up to £5,000 (Secondary Threshold)	0%
Over £5,000	15%

April 2025 Employer NI Changes

From April 2025, employer NI increased significantly:

Rate: 13.8% → 15%
Threshold: £9,100 → £5,000

This means an employer hiring someone at £35,000 now pays £4,500/year in employer NI (vs £3,575 previously). While this doesn't directly affect your payslip, it increases the total cost of employing you and may influence salary offers and pay rises.

Employment Allowance

Small businesses can claim the Employment Allowance of up to £10,500 (increased from £5,000 in April 2025), which reduces their employer NI bill. This doesn't affect employees but helps smaller employers offset the NI increase.

NI Classes Explained

Class	Who Pays	Rate (2025/26)	Purpose
Class 1	Employees	8% / 2%	Automatically deducted from salary by employer
Class 1A/1B	Employers	15%	On benefits in kind (company cars, medical insurance, etc.)
Class 2	Self-employed	£3.45/week	Flat rate on profits above £6,725. Counts towards state pension.
Class 3	Voluntary	£17.45/week	To fill gaps in your NI record for state pension
Class 4	Self-employed	6% / 2%	On profits: 6% on £12,570–£50,270, 2% above. Paid via Self Assessment.

If you're self-employed, see our complete guide to self-employed tax for a full breakdown of Classes 2 and 4.

NI and Your State Pension

Your NI record directly determines your state pension entitlement:

35 qualifying years — Full new state pension (£230.25/week for 2025/26, up from £221.20)
10 qualifying years — Minimum needed for any state pension
Fewer than 10 years — No state pension at all

A "qualifying year" means you earned above the Lower Earnings Limit (£6,396) or received NI credits (e.g. while claiming Child Benefit, Jobseeker's Allowance, or Carer's Allowance).

Check and Fill Gaps

Check your NI record at gov.uk/check-national-insurance-record. If you have gaps, you can pay voluntary Class 3 NI to fill them — at £17.45/week, filling a year costs about £907. Given the full state pension pays £11,973/year, filling even one gap is usually excellent value.

You can normally fill gaps for the past 6 tax years. A temporary extension allows some people to fill gaps back to April 2006 — check the deadline on HMRC's website as this may not last.

Key Differences: NI vs Income Tax

Feature	National Insurance	Income Tax
Age limit	Stops at state pension age (66)	Payable at any age
Income types	Earned income only (salary, wages, self-employment)	All income (salary, dividends, rental, savings, pensions)
Personal allowance	Fixed threshold, never tapers	Tapers to £0 above £125,140
Rate structure	2 bands (8% then 2%)	3 bands England (20%, 40%, 45%) or 6 bands Scotland
Collected by	HMRC via employer (PAYE)	HMRC via employer (PAYE) or Self Assessment
Funds	State pension, NHS, specific benefits	General government spending

Recent NI Rate Changes

Employee NI rates have changed significantly over the past few years:

Tax Year	Employee NI Rate	Change
2021/22	12%	Standard rate
2022/23	13.25% → 12%	Health & Social Care Levy added Apr, reversed Nov
2023/24	12% → 10%	Cut from 12% to 10% from January 2024
2024/25	8%	Cut from 10% to 8% from April 2024
2025/26	8%	Unchanged for employees

The 2023-24 cuts represent the largest NI reduction in modern history. Someone earning £35,000 pays £698 less per year at 8% compared to the old 12% rate.

How NI Affects Your Take-Home Pay

NI is the second-largest deduction from most people's salary after income tax. Here's the combined impact at key salary points:

Salary	Annual NI	Annual Income Tax	Combined Deductions
£25,000	£994	£2,486	£3,480
£35,000	£1,794	£4,486	£6,280
£50,000	£2,994	£7,486	£10,480
£75,000	£3,511	£17,432	£20,943
£100,000	£4,011	£27,432	£31,443

Use our salary calculator to see exactly how much NI you'll pay on your specific salary. If you're employed in Scotland, check our Scottish tax rates guide — while NI is the same across the UK, your income tax rates differ.