National Insurance, Explained

National Insurance (NI) is the UK's second payroll tax. Employees pay Class 1 contributions, which also build entitlement to the State Pension and some benefits.

What employees pay in 2026/27

Nothing on the first £12,570 a year, 8% on earnings up to £50,270, and 2% above that. Employers pay 15% on earnings above £5,000 a year. Unlike income tax, NI is calculated per pay period with no cumulative balancing — a high-pay month costs more NI in that month, permanently.

Qualifying years and the State Pension

Each year you earn above the Lower Earnings Limit (£6,708 in 2026/27) through work generally counts as a qualifying year. You need 35 qualifying years for the full new State Pension and at least 10 to get anything. Gaps can often be filled with voluntary Class 3 contributions — check your NI record in the HMRC app before paying, because not every gap needs filling.

How NI differs from income tax

NI stops at State Pension age; income tax does not. NI has no personal-allowance taper and no banded slices beyond its two rates. Scotland cannot change NI — it is set UK-wide, which is why Scottish payslips combine Scottish income tax with UK National Insurance. Work out your own NI with the National Insurance calculator.