National Insurance Rates Explained 2026/27: Employee, Employer and the Thresholds

Quick answer

For 2026/27, employees pay Class 1 National Insurance at 8% on earnings between £12,570 and £50,270 a year, then 2% on anything above £50,270. Employers pay 15% on every employee's earnings above the £5,000 secondary threshold, though the Employment Allowance can offset up to £10,500 of that bill. NI rates are the same everywhere in the UK.

How employee National Insurance works in 2026/27

National Insurance for employees is called Class 1 primary contributions, and it is deducted straight from your wages before they reach your bank account. There are two rates and two key thresholds.

You pay nothing on the first £12,570 of annual earnings, which is the primary threshold and conveniently matches the Personal Allowance for Income Tax. Between £12,570 and the upper earnings limit of £50,270, you pay 8%. Above £50,270, the rate drops to just 2%.

That falling rate above £50,270 surprises many people. It means a higher earner pays a smaller marginal NI rate than a middle earner, even though their Income Tax rate is rising to 40%. The two systems are stacked separately.

One important quirk: unlike Income Tax, employee NI is usually worked out per pay period rather than annually. If you are paid monthly, each month's pay is assessed against monthly versions of the thresholds (roughly £1,048 and £4,189). This matters if your income is uneven across the year, for example with bonuses.

To see the combined effect of Income Tax and NI on your wages, try our

calculator.

A worked example

Take someone earning £40,000 in 2026/27. The first £12,570 is free of NI. The remaining £27,430 falls entirely within the 8% band, giving an annual employee NI bill of around £2,194.

Now take a £70,000 earner. They pay 8% on the slice from £12,570 to £50,270, which is £37,700 taxed at 8%, or £3,016. Then they pay 2% on the £19,730 above £50,270, adding £394.60. Their total is roughly £3,411, only a little more than the £40,000 earner despite earning £30,000 more, because of that 2% top rate.

This is why NI feels regressive at the top: the marginal rate falls just as Income Tax rises.

Employer National Insurance: the 15% secondary charge

Employers pay their own National Insurance, called Class 1 secondary contributions, on top of wages. For 2026/27 the rate is 15%, charged on each employee's earnings above the secondary threshold of £5,000.

Note how much lower that £5,000 threshold is than the £12,570 employees enjoy. It means an employer starts paying NI on a worker long before the worker themselves does. There is no upper limit on employer NI, so the full 15% applies to all earnings above £5,000, including for high earners.

For an employee on £40,000, the employer pays 15% on £35,000, which is £5,250 a year on top of the salary. This is a real cost of employment that shapes pay offers and hiring decisions.

The Employment Allowance

Many smaller employers can reduce their secondary NI bill through the Employment Allowance, worth up to £10,500 for 2026/27. It is claimed through payroll software and set against the 15% employer contributions until exhausted.

For a small firm with a modest payroll, this allowance can wipe out the employer NI bill entirely. A business with two employees each earning £25,000 would face an employer NI charge of about £6,000, comfortably covered by the £10,500 allowance.

Not everyone qualifies. Single-director companies with no other employees are generally excluded, as are employers doing more than half their work in the public sector. Charities and community amateur sports clubs can usually claim.

How NI compares with Income Tax, and the devolved picture

It is worth being clear that National Insurance and Income Tax are entirely separate systems that happen to be deducted together on your payslip. Income Tax runs cumulatively across the year with bands of 20%, 40% and 45%, while NI is usually per-period at 8% then 2%. You can model the income tax side separately with our

calculator.

Crucially, National Insurance is not devolved. The 8%, 2% and 15% rates and the £12,570, £50,270 and £5,000 thresholds are identical whether you work in England, Scotland, Wales or Northern Ireland. This contrasts with Income Tax, where Scotland operates its own bands including an intermediate 21% rate, a higher 42% band and an advanced 45% band, and Wales sets its own Welsh Rate of Income Tax. So a Scottish worker may pay different Income Tax from an English one, but their NI is exactly the same.

When you stop paying

Employee National Insurance stops once you reach State Pension age, even if you continue working. Your employer, however, still has to pay their 15% secondary contribution on your wages. Pension income, whether from the State Pension or a private pension, is never subject to NI at any age, though it can still be liable to Income Tax above your Personal Allowance.

For the self-employed, the picture differs again: NI is paid through Self Assessment rather than payroll, with its own classes and thresholds, so employed and self-employed contributions are not directly comparable.

National Insurance funds the State Pension and certain contributory benefits, and your record of qualifying years determines your State Pension entitlement, currently around £241.30 a week for the full new State Pension. Even years where you earn below the threshold can count toward your record if you receive National Insurance credits.