The short answer
National Insurance 2026/27: employee Class 1 at 8% and 2%, employer NI at 15%, Class 2 and Class 4 for the self-employed, and how thresholds are calculated.
National Insurance is a contribution on earnings that helps fund the State Pension and other contributory benefits. Class 1 employee NICs are calculated by pay period, not by simply applying an annual income-tax calculation. For 2026/27, category A employees pay 8% above the primary threshold up to the upper earnings limit and 2% above it; the annual equivalents are £12,570 and £50,270. Employers generally pay 15% above the £5,000 secondary threshold. The self-employed pay Class 4 at 6% and 2% on profits in the published bands, while most people with profits at or above the Small Profits Threshold have Class 2 treated as paid rather than paying it. See your position with the Salary Calculator.
This guide sets out the 2026/27 thresholds, the employee and employer calculations, the self-employed classes, how salary sacrifice interacts with NI, and the quirks that catch people out — including multiple jobs and the £10,500 Employment Allowance.
8% then 2% for employees
Employer pays 15%
Class 4 at 6% and 2%
The 2026/27 Employee Rates (Class 1)
| Earnings band (per year) | Employee rate |
|---|---|
| £0 – £12,570 | 0% |
| £12,571 – £50,270 | 8% |
| Over £50,270 | 2% |
The primary threshold of £12,570 matches the income tax Personal Allowance, but the resemblance ends there. NI is applied per pay period: a monthly payroll deducts 8% from earnings above £1,047.50 in each month, and the 2% rate kicks in above £4,189 a month. Because the calculation restarts every month, a bonus that takes one month's pay above the upper earnings limit attracts only 2% on the excess — whereas income tax is cumulative and would tax the annual position. The practical result is that NI is a flat-ish tax on employment income between £12,570 and £50,270, costing a basic-rate employee roughly £3,016 a year at the top of the band.
Worked Example — Employee NI
£35,000 salary: taxable NI band is £35,000 − £12,570 = £22,430 at 8% = £1,794. The 2% rate does not apply below £50,270.
£70,000 salary: 8% on £37,700 (£50,270 − £12,570) = £3,016, plus 2% on £19,730 (£70,000 − £50,270) = £395. Total NI £3,411.
| Salary | NI at 8% | NI at 2% | Total NI |
|---|---|---|---|
| £35,000 | £1,794 | £0 | £1,794 |
| £70,000 | £3,016 | £395 | £3,411 |
Employer NI (Class 1 Secondary)
Employers pay 15% on earnings above the secondary threshold of £5,000 a year — with no upper cap, so a £70,000 salary attracts employer NI of £65,000 × 15% = £9,750. This is part of the employee's true cost to the business and explains why hiring decisions weigh gross salary plus NI plus pension. Eligible employers can claim the Employment Allowance, which reduces the employer NI bill by up to £10,500 a year. Eligibility depends on the employer's circumstances, so check the current GOV.UK conditions rather than assuming every company qualifies.
Self-Employed NI — Class 2 and Class 4
| Class | Rate | Threshold |
|---|---|---|
| Class 2 (voluntary for most) | £3.65 a week | Small profits threshold £7,105 |
| Class 4 | 6% up to £50,270, 2% above | Lower profits limit £12,570 |
Since 2024/25, Class 2 has been abolished for most self-employed people: you no longer pay it to build State Pension entitlement, because a qualifying year is earned once profits exceed the Small Profits Threshold of £7,105. You can still pay Class 2 voluntarily to fill gaps or top up years. Class 4, by contrast, is a real charge: profits of £45,000 pay 6% on £32,430 = £1,946. Class 4 is collected through Self Assessment alongside income tax, which is why the self-employed face both 20%/40% income tax and the Class 4 charge on the same profits.
Salary Sacrifice and NI
For a genuine salary-sacrifice arrangement, the employee gives up contractual pay and receives an eligible benefit instead. The sacrificed amount is generally removed from the NIC-able pay used for the relevant calculation, so it can reduce employee and employer NICs, subject to the benefit and payroll rules. Sacrificing £5,000 at category A rates could represent up to £400 of employee NIC and £750 of employer NIC before considering other limits, but the actual result depends on pay periods, category letters, eligibility and whether the employer shares its saving. A normal employee pension contribution deducted from pay is not the same as salary sacrifice.
The Quirks That Catch People Out
| Situation | NI treatment |
|---|---|
| Multiple jobs | Each employment is normally calculated separately for Class 1 payroll purposes; the result depends on pay frequency and category |
| Dividends | No NI at all — a key reason directors take low salary plus dividends |
| Pension income | No employee NI on pension withdrawals |
| Rental income | No NI — only employment and self-employment profits are charged |
The multiple-jobs rule can produce a different result from one consolidated employment because each employer normally applies Class 1 thresholds separately. Two part-time jobs can therefore have lower employee NICs than one job with the same combined pay, but pay frequency, category letters and the Lower Earnings Limit still matter. Employees should not assume that two annual salaries below £12,570 always mean no NIC or no qualifying National Insurance year. Directors should also take separate tax and company-law advice before using a salary-plus-dividend structure.
The Marginal Rate Picture
Income tax and NI stack on top of each other, so the true marginal rate on employment income is higher than the headline bands suggest. A basic-rate employee pays 20% income tax plus 8% NI on each extra pound between £12,570 and £50,270 — a combined 28% marginal rate — and above £50,270 the marginal rate is 42% (40% plus 2%). Inside the Personal Allowance taper between £100,000 and £125,140, the effective rate reaches 62% once the 2% NI is added to the 60% effective income tax rate. The self-employed see a similar stack: profits between £12,570 and £50,270 face 20% income tax plus 6% Class 4, with any voluntary Class 2 contribution considered separately. Understanding these combined rates is what makes planning decisions — pension contributions, salary sacrifice, dividend switches — rational: a pension contribution for a basic-rate employee is effectively made from income taxed at 28%, and for a higher-rate employee at 42%.
| Income slice | Income tax | NI | Combined marginal rate |
|---|---|---|---|
| £12,571 – £50,270 (employee) | 20% | 8% | 28% |
| £50,271 – £100,000 (employee) | 40% | 2% | 42% |
| £100,000 – £125,140 | 60% effective | 2% | 62% |
Filling State Pension Gaps
If your NI record shows gaps — years abroad, time out of work, low earnings — you can usually fill them with voluntary contributions. The applicable Class 2 and Class 3 rates, deadlines and whether a year improves your forecast depend on your record, so check the current GOV.UK State Pension and voluntary-contribution guidance before paying. Check your State Pension forecast first; buying a year is useful only if it improves your entitlement.
Planning Your NI Position
Optimise NI for 2026/27
- 1Review your payroll — check your employer applies the correct NI thresholds each pay period.
- 2If self-employed, confirm your profits against the £7,105 Small Profits Threshold for State Pension years.
- 3Consider salary sacrifice for pension or benefits to cut both employee and employer NI.
- 4If you are a director, review the salary-plus-dividend split against the £12,570 primary threshold.
- 5Check the £10,500 Employment Allowance if you employ staff through a company.
Frequently Asked Questions
Evidence and decision checks
A reliable national insurance 2026 27 review starts by fixing the tax year and the date on which the relevant event happened. Record the person's or business's status, the income or transaction category, the amount before tax, tax already withheld, and any election or claim being relied on. Do not combine a headline figure with a final liability: the result can change when another income source, a payment date, an ownership interest or a qualifying condition is added.
Keep the source documents behind every important input. Depending on the subject, that may include payslips, invoices, bank statements, contracts, provider statements, travel records, HMRC notices, payroll submissions, valuations or correspondence. Where an amount is apportioned, write down the method and retain the underlying total. If a correction is made, preserve the original figure and explain the reason, date and evidence for the replacement.
Before relying on the result, check the current official guidance for the same tax year and jurisdiction. Distinguish enacted law from a consultation, draft measure, announcement or future proposal, and record the effective date. Reconcile the final estimate to the relevant return, payroll record or HMRC account. A calculator or explanatory guide can support a decision, but it cannot replace the eligibility test or the official filing and payment process.
Evidence and decision checks
A reliable national insurance 2026 27 review starts by fixing the tax year and the date on which the relevant event happened. Record the person's or business's status, the income or transaction category, the amount before tax, tax already withheld, and any election or claim being relied on. Do not combine a headline figure with a final liability: the result can change when another income source, a payment date, an ownership interest or a qualifying condition is added.
Keep the source documents behind every important input. Depending on the subject, that may include payslips, invoices, bank statements, contracts, provider statements, travel records, HMRC notices, payroll submissions, valuations or correspondence. Where an amount is apportioned, write down the method and retain the underlying total. If a correction is made, preserve the original figure and explain the reason, date and evidence for the replacement.
Before relying on the result, check the current official guidance for the same tax year and jurisdiction. Distinguish enacted law from a consultation, draft measure, announcement or future proposal, and record the effective date. Reconcile the final estimate to the relevant return, payroll record or HMRC account. A calculator or explanatory guide can support a decision, but it cannot replace the eligibility test or the official filing and payment process.
Keep the payslip, P60, NI category and official threshold table together for each tax year.
Income Tax and National Insurance should be reconciled in separate working papers.
A separate NI reconciliation
Compare the NI category, pay period, thresholds and contribution on each payslip with the P60 and payroll report. Multiple employments, director annual calculations, irregular pay and benefits can make a simple monthly comparison misleading. Self-employed profits, voluntary contributions and an employer's Class 1 liability should be shown in separate schedules.
Before paying voluntary contributions, check the state-pension record and the qualifying gap. A payment can be unnecessary or fail to improve the eventual entitlement. Save the official rates and thresholds used for the tax year, test boundary cases and ask HMRC to correct the underlying record before treating an apparent overpayment as final.
Reconcile National Insurance separately from Income Tax
National Insurance is not simply another Income Tax band. Start with the type of income and the person's employment or self-employed status. Compare payslips, P60s, payroll reports, self-employed profits and director records. A tax code can be correct while an NI category is wrong, and a personal allowance does not decide whether an NI contribution is due.
Employers should check the NI category letter, thresholds, directors' annual method, payroll dates and benefits that belong in Class 1. Self-employed people should keep profit calculations and payment records, while voluntary contributors should check whether the contribution improves a state-pension record. Do not pay voluntarily before confirming the gap and the qualifying benefit.
When a rule changes, save the official rates and thresholds used for the year and test boundary cases. Reconcile any HMRC statement or pension forecast to the underlying record before making a large payment or assuming that an amount is refundable.
What are the National Insurance thresholds for 2026/27?
Do I pay National Insurance on dividends?
Is Class 2 National Insurance still payable?
What is the Employment Allowance?
How does NI affect my State Pension?
Can salary sacrifice reduce my National Insurance?
Do I pay NI on pension income in retirement?
Is National Insurance calculated annually or each payday?
Why can two jobs produce a different NI result from one job?
How is National Insurance different for company directors?
Check your full take-home position including NI and any student loan with the Salary Calculator, then read the Employer NI guide for the payroll side and the Income Tax Bands guide for how the two taxes stack.
Official sources
- GOV.UK: How much National Insurance you pay
- GOV.UK: National Insurance rates and allowances 2026 to 2027
- GOV.UK: National Insurance rates and categories
- GOV.UK: Rates and thresholds for employers 2026 to 2027
- GOV.UK: Benefit and pension rates 2026 to 2027
- GOV.UK: Self-employed National Insurance rates
These GOV.UK pages are the official references for employee, employer and self-employed National Insurance, rates, categories and thresholds. Check the current class and pay facts before calculating liability.
Related Guides
How UK Tax Is Calculated 2026/27 — PAYE, NI & Loans
How UK income tax, National Insurance and student loan repayments are calculated in 2026/27: allowances, bands, thresholds, codes and examples.
Scottish Income Tax 2026/27 — Full Bands & Rate Breakdown
Scottish income tax for 2026/27: bands, the S tax code, comparison with the rest of the UK and National Insurance.
Inheritance Tax 2026/27 — Nil Rate Band, Residence NRB & 40% Rate
Inheritance Tax for 2026/27: the £325,000 nil rate band, £175,000 residence nil rate band, 40% rate, transferable allowances for couples and the £2m taper.
Review notes and assumptions
Reviewed
2026-09-19
Assumptions
- This guide covers UK National Insurance for the 2026/27 tax year using GOV.UK and HMRC material checked on 19 September 2026. Category letters, director calculations, benefits, multiple employments and voluntary contributions can produce different results from the standard examples.
- Worked figures are illustrative and use the stated pay or profit period; payroll software, annual Self Assessment calculations and the individual's National Insurance record determine the final amount.