National Insurance Explained 2026/27

Quick answer

National Insurance (NI) is a tax on earnings that funds the State Pension and some other benefits, and your NI record decides how much State Pension you eventually get. In 2026/27:

• Employees pay 8% on earnings between £12,570 and £50,270, and 2% above that.
• Employers pay 15% on each worker's earnings above £5,000 a year.
• The self-employed pay Class 4 at 6% on profits between £12,570 and £50,270, and 2% above; Class 2 is no longer mandatory but can be paid voluntarily to protect benefits.

To get the full new State Pension you need 35 qualifying years of contributions or credits; you need at least 10 years to get anything. This guide explains each class, who pays what, and how to check and improve your record.

What National Insurance actually pays for

Unlike income tax, which goes into the general pot, NI is notionally linked to contributory benefits. Your NI record builds up "qualifying years" that determine entitlement to:

• The State Pension (the big one)
• Contribution-based Jobseeker's Allowance and Employment and Support Allowance
• Maternity Allowance and bereavement benefits

In practice the money is spent as it comes in, but your record is what matters for your future pension. That is why understanding NI is really about protecting your pension entitlement, not just minimising a deduction.

Class 1: employees

If you are employed, you pay Class 1 primary NI, deducted automatically through PAYE alongside income tax. For 2026/27:

So someone earning £30,000 pays 8% on the £17,430 above the threshold = £1,394 a year. Someone on £60,000 pays 8% on the band up to £50,270 (£3,016) plus 2% on the £9,730 above it (£195) = £3,211 a year.

NI is calculated per pay period, not annually, which is why people with irregular pay or multiple jobs can end up paying slightly more or less than the annual figures suggest. See your exact deduction with the

, or the full payslip breakdown with the .

Class 1 secondary: employers

Employers pay Class 1 secondary NI on top of wages. For 2026/27 the rate is 15% on each employee's earnings above the £5,000 annual secondary threshold (a much lower threshold than the employee one, following the changes that took effect in April 2025).

So on a £30,000 salary, the employer pays 15% × (£30,000 − £5,000) = £3,750 in employer NI — a significant cost on top of the wage. Many small businesses can offset this through the Employment Allowance, which covers up to £10,500 of employer NI per year, effectively wiping it out for the smallest employers.

Employer NI matters to employees too: it is one reason salary sacrifice into a pension is so efficient, because both the employee and employer NI on the sacrificed amount disappear.

Class 2 and Class 4: the self-employed

If you are self-employed, you pay NI through Self Assessment, not PAYE. There are two classes:

Class 4 is the main one, charged on your profits:

Class 2 used to be a flat weekly charge (£3.45/week) that built your State Pension entitlement. Since April 2024 it is no longer compulsory: if your profits are above the £6,845 Small Profits Threshold, you are treated as having paid Class 2 and get your qualifying year for free. If your profits are below that threshold, you can still pay Class 2 voluntarily to protect your State Pension and benefit entitlement — at a few pounds a week, it is usually a bargain.

A self-employed person earning £40,000 of profit pays Class 4 at 6% on the £27,430 above the threshold = £1,646, and gets their qualifying year automatically. Work out your combined income tax and NI with the

.

Qualifying years and the State Pension

This is the part that matters most for your future. The new State Pension (for those reaching State Pension age from April 2016) works on qualifying years:

• 35 qualifying years for the full new State Pension (worth around £230 a week / roughly £12,000 a year in 2026/27, rising each year under the triple lock).
• 10 qualifying years minimum to get any new State Pension at all.
• Between 10 and 35 years, you get a proportionate amount — roughly 1/35th of the full pension for each qualifying year.

A qualifying year is one in which you either paid enough NI, were credited with NI, or paid voluntary contributions. Crucially, you cannot bank more than the full pension — once you have 35 qualifying years, extra years add nothing (with limited exceptions for those with old "contracted-out" history). See your projected entitlement with the

.

NI credits: years you get without paying

You can earn qualifying years without paying NI in several situations, through NI credits:

• Claiming Child Benefit for a child under 12 (so a stay-at-home parent still builds State Pension).
• Receiving certain benefits such as Jobseeker's Allowance or Carer's Allowance.
• Being a registered carer for 20+ hours a week (Carer's Credit).
• Periods of illness or disability while claiming the relevant benefits.

Voluntary contributions: plugging the gaps

If you reach State Pension age short of 35 qualifying years, you may be able to buy missing years with voluntary contributions:

• Class 3 voluntary contributions cost around £900 for a full year and can add roughly £330 a year to your State Pension for life.
• That means a single year typically pays for itself in under three years of retirement — an exceptional return for most people.
• Normally you can fill gaps going back six tax years, though wider windows have applied at times for those affected by past system changes.

Before buying, always check your forecast first: extra years only help if they actually increase your pension. Someone who already has 35 years, or who has substantial contracted-out history, may gain nothing from buying more. The

helps you see whether topping up is worthwhile.

How to check your NI record

You can check your full record and pension forecast online through your Personal Tax Account or the HMRC app, using a Government Gateway login. It shows:

• How many qualifying years you have so far.
• Any gaps in your record and whether they can be filled.
• The cost of voluntary contributions to fill each gap.
• Your forecast State Pension and the date you reach State Pension age.

It is worth checking this every few years, and certainly in your 50s, so you have time to fill any worthwhile gaps before you retire. Gaps from years spent abroad, in low-paid work below the threshold, or studying are common and easy to miss.

How NI is worked out on your payslip

Unlike income tax, which is calculated on a cumulative, year-to-date basis, employee NI is normally worked out separately for each pay period. Your monthly or weekly earnings are compared against the monthly or weekly equivalents of the thresholds, and NI is charged on that period alone.

This has some practical consequences:

• Irregular pay — if you earn a large amount one month (say a bonus) and little the next, you may pay more NI overall than someone earning the same annual total spread evenly, because the spike pushes more earnings into the 8% band in a single period.
• No automatic year-end reconciliation — there is generally no end-of-year NI refund the way there can be with income tax, precisely because NI is assessed period by period rather than annually.
• Starting or leaving a job mid-year — you get the threshold-free band in each pay period you are paid, so starting work partway through the year does not cost you NI on the earnings you never received.

The

uses the annual figures for a clear estimate, but your actual payslip may differ slightly month to month because of this period-by-period method.

Directors have special NI rules

Company directors are an important exception to the period-by-period rule. Because directors can control when and how they pay themselves, NI for directors is calculated on an annual (cumulative) basis to stop them dodging NI by taking pay in a single lump. A director's NI is worked out on their total earnings for the year against the annual thresholds, which is why many owner-directors pay themselves a small salary plus dividends — the salary is set to use the personal allowance and qualify for a State Pension year while keeping NI low, and dividends carry no NI at all. Model the salary-versus-dividend split with the

.

NI and the State Pension age

The State Pension age is currently 66, rising to 67 between 2026 and 2028, and to 68 thereafter. You stop paying employee and self-employed NI once you reach State Pension age, even if you keep working — your earnings are then NI-free, though still subject to income tax. This is one of the quiet financial advantages of working past State Pension age.

Why the April 2025 employer NI change matters

The April 2025 reforms reshaped employer National Insurance in two ways that still define the 2026/27 landscape. First, the rate rose to 15%. Second — and more significant for low-wage employers — the secondary threshold was cut to £5,000 per employee, down from a much higher figure. Together these sharply increased the cost of employing someone, especially part-time and lower-paid staff whose earnings previously fell largely below the old threshold.

For employees, the change is mostly indirect but real: higher employer NI puts pressure on pay rises, makes employers keener on salary-sacrifice arrangements (which cut employer NI as well as employee NI), and increases the relative attractiveness of pension contributions. For small employers, the Employment Allowance of up to £10,500 is the main relief, and it was expanded precisely to soften the blow of these changes for the smallest businesses. If you run a small payroll, the allowance can wipe out your employer NI entirely up to that limit — making it one of the most valuable reliefs to claim correctly.

Common questions

Do I pay NI on my pension income? No. National Insurance is only charged on earnings from work (employment or self-employment). Pension income, savings interest, dividends and rental income are not subject to NI.

Do I pay NI on a second job? Yes — each job's earnings are assessed separately for NI, so you get the threshold-free band on each, which can mean you pay slightly less NI overall than if the same total were from one job. Income tax, however, is assessed across all your income together.

What happens to my NI if I move abroad? Your existing record is preserved, and depending on the country you may be able to keep contributing voluntarily to protect your UK State Pension. Whether your pension is uprated each year abroad depends on the country.

Is NI going to be merged with income tax? It has been discussed for decades but never implemented. For now they remain separate, with different thresholds and rules, which is why your payslip shows two deductions. Model both together with the

.

The bottom line

National Insurance in 2026/27 means 8% then 2% for employees, 15% above £5,000 for employers, and 6% then 2% for the self-employed under Class 4. But the deduction is only half the picture — your NI record decides your State Pension, and 35 qualifying years earns the full amount. Check your record, claim the credits you are entitled to (especially Child Benefit credits), and consider voluntary contributions to plug any gaps. For most people, topping up missing years is one of the best-value financial decisions available.

This article is general information, not financial advice. Figures use 2026/27 UK rates. Check your own record and forecast through your Personal Tax Account before making voluntary contributions.