Guide · Updated April 2025
National Insurance Explained: 2025/26
National Insurance (NI) is a tax on earnings that funds State Pension and certain benefits. Whether you're an employee, self-employed, or running a limited company as a director, understanding your NI obligations is essential. This guide covers all the rates, thresholds and rules for the 2025/26 tax year — including the big April 2025 change to employer NI.
What is National Insurance?
National Insurance is a system of taxes on earnings, paid by workers (employees and the self-employed) and employers in the United Kingdom. It was introduced by the National Insurance Act 1911 and now sits alongside Income Tax as one of the two main payroll taxes.
Unlike Income Tax, NI is in theory a “contributory” tax: paying NI builds up your entitlement to certain state benefits, particularly the State Pension. In practice, NI revenues flow into the same general budget as Income Tax, so the contributory link is more historical than functional today.
The 4 Classes of NI
UK National Insurance is divided into four classes (Class 2 was abolished in April 2024 for most people):
- Class 1 — paid by employees and their employers, on earnings
- Class 2 — was paid by the self-employed; abolished April 2024 (still voluntary)
- Class 3 — voluntary contributions to fill gaps in your record
- Class 4 — paid by the self-employed on profits
Class 1: Employee NI
If you're an employee earning above £242 per week (£1,048 per month, £12,570 per year)[gov.uk], you pay Class 1 NI. Your employer deducts it from your pay through PAYE.
| Weekly earnings | Yearly equivalent | Rate |
|---|---|---|
| Up to £242 | Up to £12,570 | 0% |
| £242 – £967 | £12,570 – £50,270 | 8% |
| Above £967 | Above £50,270 | 2% |
For example, on a £50,000 salary you would pay 8% × (£50,000 − £12,570) = £2,994.40 in employee NI for the year. Use our National Insurance Calculator to work out your exact amount.
Class 1: Employer NI — April 2025 Change
From 6 April 2025, the headline employer NI rate increased from 13.8% to 15%[gov.uk]. The Secondary Threshold (where employer NI kicks in) was reduced from £9,100 to £5,000. This means employers pay significantly more on every employee.
On a £30,000 employee:
- 2024/25: 13.8% × (£30,000 − £9,100) = £2,884.20
- 2025/26: 15% × (£30,000 − £5,000) = £3,750 (an extra £866)
The Employment Allowance was increased from £5,000 to £10,500to soften the blow for small employers. You can claim this against your NI bill if your previous year's liability was under £100,000.
Class 2 — Abolished in April 2024
From April 2024, self-employed workers no longer have to pay compulsory Class 2 NI contributions[gov.uk]. You still gain entitlement to State Pension and benefits as long as your profits are above the Class 2 Small Profits Threshold. You can still pay Class 2 voluntarily (£3.50/week in 2025/26) if your profits are below this level, to maintain your contribution record.
Class 3: Voluntary Contributions
Class 3 lets you pay voluntary contributions to fill gaps in your NI record — particularly useful for ensuring a full State Pension (you need 35 qualifying years). For 2025/26, Class 3 costs £17.75 per week or £923.00 for a full year. You can normally only fill gaps from the last 6 years, though a transitional rule has allowed people to fill gaps back to 2006 until April 2025.
Class 4: Self-Employed
Class 4 NI is paid by self-employed people based on annual profits as declared in Self Assessment:
| Annual profits | Rate |
|---|---|
| Up to £12,570 | 0% |
| £12,570 – £50,270 | 6% |
| Above £50,270 | 2% |
Class 4 NI is paid alongside your Income Tax through Self Assessment by 31 January each year.
All NI Thresholds 2025/26
| Threshold | Annual | Weekly |
|---|---|---|
| Lower Earnings Limit (LEL) | £6,500 | £125 |
| Secondary Threshold (Employer NI starts) | £5,000 | £96 |
| Primary Threshold (Employee NI starts) | £12,570 | £242 |
| Upper Earnings Limit (UEL) | £50,270 | £967 |
What Does NI Pay For?
Your NI record entitles you to certain “contributory” benefits:
- State Pension (need 35 qualifying years for full new State Pension of £230.25/week)
- Contribution-based Jobseeker's Allowance
- Contribution-based Employment and Support Allowance
- Maternity Allowance (if not eligible for SMP)
- Bereavement Support Payment
Checking Your NI Record
You can view your full NI record online at gov.uk/check-national-insurance-record. Sign in with your Government Gateway account. The record shows any gaps and how to fill them with Class 3 voluntary contributions if needed.