What is National Insurance?
National Insurance (NI) is a tax on earnings and profits paid by employees, employers, and the self-employed. It funds the State Pension, the NHS, and certain other state benefits. Unlike income tax, NI is not charged on savings interest or most investment income — it's specifically a tax on earned income.
Employee NI (Class 1) — 2025–26
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Calculate your NI contributions →If you're employed, you pay Class 1 NI contributions on your wages:
| Earnings | NI rate |
|---|---|
| Up to £12,570 (Primary Threshold) | 0% |
| £12,571 – £50,270 (Upper Earnings Limit) | 8% |
| Over £50,270 | 2% |
The 8% rate was reduced from 10% in January 2024 and then again from 10% to 8% in April 2024. There is no NI equivalent of the personal allowance taper — the thresholds apply in full regardless of total earnings.
Employer NI — 2025–26
Your employer also pays Class 1 NI on your wages. From April 2025, the rate is 15% on earnings above the Secondary Threshold of £5,000 per year (reduced from £9,100 following the October 2024 Budget). This cost is borne entirely by your employer and doesn't appear on your payslip, but it does affect the total cost of employing you.
Self-employed NI (Class 4 & Class 2)
From April 2024, Class 2 NI was effectively abolished for most self-employed people. You no longer need to pay the flat weekly Class 2 charge, but you can still get State Pension credit provided your profits exceed the Small Profits Threshold (£6,845 for 2025–26).
Class 4 NI is still charged on self-employment profits:
| Profits | Class 4 rate |
|---|---|
| Up to £12,570 | 0% |
| £12,571 – £50,270 | 6% |
| Over £50,270 | 2% |
NI and your State Pension
Your NI record determines whether you're entitled to the new State Pension and how much you receive. You need 35 qualifying years of NI contributions (or credits) to get the full new State Pension. A minimum of 10 qualifying years is needed to receive any State Pension at all.
Qualifying years are built through employment or self-employment above the relevant thresholds, or through National Insurance credits (given automatically for periods of unemployment, caring responsibilities, or illness).
Voluntary Class 3 contributions
If you have gaps in your NI record — perhaps from time abroad or periods out of work — you can fill them by paying voluntary Class 3 contributions. The current rate is £17.45 per week (2025–26). Given that each qualifying year adds roughly £310/year to your State Pension for life, this is usually an extremely good investment for those who are short of 35 qualifying years.
Check your NI record and State Pension forecast at gov.uk/check-state-pension.
NI vs income tax
A key difference to understand: income tax uses a single progressive set of bands across your total income, whereas NI is calculated separately on each source of earned income. If you have both employment income and self-employment profits, you pay employee NI on your wages and Class 4 NI on your profits independently — but both are subject to the same upper earnings limit threshold, above which the rate drops to 2%.