National Insurance UK — Rates, Thresholds & Self-Employed NI
National Insurance (NI) is the deduction most people see on their payslip every month — and the one fewest people understand. It is not Income Tax, it is worked out differently, and what you pay decides whether you qualify for the State Pension and some benefits. This guide explains the 2025/26 rates and thresholds for employees, employers and the self-employed.
What is National Insurance?
National Insurance is a tax on earnings and self-employed profits. It is separate from Income Tax, with its own thresholds and rates, and it is usually collected through PAYE on your payslip if you are employed, or through Self Assessment if you are self-employed.
You pay NI on earnings above a threshold, and the rate falls once your earnings pass a second threshold. Your employer pays NI too, on top of your salary — it does not come out of your pay.
What does National Insurance pay for?
NI contributions build your entitlement to:
- The State Pension — the main one. You need 35 qualifying years for the full new State Pension, and at least 10 for any new State Pension at all.
- Some benefits, including contribution-based Jobseeker’s Allowance and Employment and Support Allowance, and Maternity Allowance.
- The NHS and other public services, which are partly funded from NI.
The full new State Pension is £241.30 per week in 2025/26. Your NI record — the years in which you paid, or were treated as having paid, enough NI — decides how much of it you get. A year counts as a “qualifying year” if you paid or were credited with enough NI in it.
Employee National Insurance — Class 1
If you are employed, you pay Class 1 NI on your earnings:
| Earnings | Employee rate |
|---|---|
| Up to £12,570 a year | 0% |
| £12,570 to £50,270 a year | 8% |
| Above £50,270 a year | 2% |
The £12,570 starting point is the Primary Threshold (£242 a week, or £1,048 a month). Below it you pay no NI; the 8% rate applies between £12,570 and £50,270, and 2% above that.
NI for employees is worked out per pay period, not over the whole year — so a one-off bonus can push that month’s pay into the 2% band even if your annual salary is below £50,270.
There is also a Lower Earnings Limit of £125 a week (£6,396 a year). Below it, you pay no NI and earn no qualifying year; between it and the Primary Threshold, you pay no NI but are treated as having paid for State Pension purposes.
Worked example 1 — employee on £35,000
Emma earns £35,000 a year.
- Earnings above the Primary Threshold: £35,000 − £12,570 = £22,430
- All of this is in the 8% band
- NI due: 8% × £22,430 = £1,794.40 a year
That is about £149.53 a month.
Worked example 2 — employee on £60,000
Daniel earns £60,000 a year.
- Earnings in the 8% band: £50,270 − £12,570 = £37,700 → 8% × £37,700 = £3,016.00
- Earnings above £50,270: £60,000 − £50,270 = £9,730 → 2% × £9,730 = £194.60
- Total NI due: £3,016.00 + £194.60 = £3,210.60 a year
Employer National Insurance — Class 1
Your employer also pays Class 1 NI, at 15% on your earnings above the Secondary Threshold of £5,000 a year (£96 a week, or £417 a month). This is paid on top of your salary and does not reduce your take-home pay.
For Daniel on £60,000, his employer pays roughly 15% × (£60,000 − £5,000) = £8,250 a year — so the true cost of employing someone is considerably more than their salary.
Self-employed National Insurance — Class 4 and Class 2
If you are self-employed, you pay NI on your profits, not your turnover, worked out through Self Assessment once a year — not per pay period.
Class 4 is the main self-employed NI in 2025/26:
| Profits | Class 4 rate |
|---|---|
| Up to £12,570 a year | 0% |
| £12,570 to £50,270 a year | 6% |
| Above £50,270 a year | 2% |
Class 2 changed in April 2024: it is no longer payable as a separate weekly charge. Instead:
- If your profits are at or above the Small Profits Threshold of £6,845, you are treated as having paid Class 2, so you build up a qualifying year without paying anything extra.
- If your profits are below £6,845, you can pay Class 2 voluntarily at £3.50 a week to protect your State Pension record.
Worked example 3 — self-employed profit of £40,000
Aisha is a sole trader with profits of £40,000.
- Profits above £12,570: £40,000 − £12,570 = £27,430
- All of this is in the 6% band
- Class 4 NI due: 6% × £27,430 = £1,645.80
- Class 2: treated as paid, as her profits are above £6,845.
Worked example 4 — self-employed profit of £60,000
Ben is a sole trader with profits of £60,000.
- Profits in the 6% band: £50,270 − £12,570 = £37,700 → 6% × £37,700 = £2,262.00
- Profits above £50,270: £60,000 − £50,270 = £9,730 → 2% × £9,730 = £194.60
- Total Class 4 NI due: £2,262.00 + £194.60 = £2,456.60
- Class 2: treated as paid, as his profits are above £6,845.
Gaps in your NI record and voluntary contributions
If you have years when you did not pay enough NI — time out of work, living abroad, or low self-employed profits — those years may not count towards your State Pension. Check your record for gaps on GOV.UK, through the “Check your National Insurance record” service.
You can usually fill gaps by paying voluntary Class 3 contributions at £17.75 a week in 2025/26. Before paying, check whether the gap matters — some years are not worth filling, for example if you will already reach 35 qualifying years. You can normally only pay for gaps in the last six tax years.
Directors’ National Insurance
Company directors pay Class 1 NI, generally worked out on an annual basis rather than per pay period. The rates and thresholds are the same as for other employees. The detail depends on how the director is paid — salary, dividends, or a mix — and dividends do not attract NI at all, which is one reason company owners often take a small salary plus dividends. Get advice before choosing a salary-and-dividend split.
Changes coming in 2026/27
- Class 2 voluntary rate rises to £3.65 a week.
- Small Profits Threshold rises to £7,105.
- Class 1 and Class 4 rates and thresholds are unchanged.
What to check now
- Check your payslip: your NI should be 8% of pay between £12,570 and £50,270 (on an annual basis), and 2% above that.
- If you are self-employed, check your profit figure — NI is charged on profit, not turnover.
- Check your NI record on GOV.UK for gaps, especially if you have had years out of work or on low profits.
- If you have gaps, check whether voluntary Class 3 at £17.75 a week is worth paying before the six-year window closes.
- If you run a company, check whether your salary level makes the best use of the NI thresholds.
Frequently asked questions
How much National Insurance do I pay on £35,000?
As an employee: 8% × (£35,000 − £12,570) = £1,794.40 a year. Your employer pays 15% on earnings above £5,000 on top of that.
Do I pay National Insurance if I earn under £12,570?
No. Below the Primary Threshold of £12,570 a year you pay no NI. If you earn between £125 a week and £242 a week, you are still treated as having paid for State Pension purposes.
How much National Insurance do self-employed people pay?
Class 4 at 6% on profits between £12,570 and £50,270, and 2% above £50,270. Class 2 is no longer payable — you are treated as having paid it if your profits are £6,845 or more.
How many years of National Insurance do I need for the full State Pension?
35 qualifying years for the full new State Pension (£241.30 a week in 2025/26), and at least 10 years to get any new State Pension at all.
Can I fill gaps in my National Insurance record?
Yes, usually by paying voluntary Class 3 contributions at £17.75 a week in 2025/26. Check your record on GOV.UK first, and check whether the gap is worth filling.
This article gives general information about UK tax, not personal financial or tax advice. Tax rules can change, and your situation may be different. Check GOV.UK or speak to a qualified accountant before you act.
