Glossary · UK
What is National Insurance (NI)?
A contribution paid on earnings that funds the State Pension and some benefits.
Full Definition
National Insurance (NI) is a contribution on earnings and self-employed profits that builds your entitlement to the State Pension and certain benefits. Employees pay Class 1 NI through PAYE: in 2026/27 the rate is 8% on earnings between the Primary Threshold (GBP 12,570) and the Upper Earnings Limit (GBP 50,270), then 2% above. Employers pay Class 1 secondary NI at 15% on earnings above GBP 5,000. The self-employed pay Class 4 NI on profits at 6% then 2%. Unlike Income Tax, NI is charged per pay period for employees rather than cumulatively over the year.
How National Insurance (NI) is calculated
Class 1 NI = (min(Earnings, 50270) - 12570) x 8% + max(0, Earnings - 50270) x 2%- 12570
- Primary Threshold: no employee NI below this (GBP, 2026/27).
- 50270
- Upper Earnings Limit: rate drops to 2% above this.
- 8% / 2%
- Main rate then upper rate of Class 1 employee NI.
Worked example: On GBP 35,000: (35,000 - 12,570) x 8% = 22,430 x 8% = GBP 1,794.40 of National Insurance for the year.