Most employees pay 8% National Insurance on earnings between £12,570 and £50,270, then just 2% on anything above that. The self-employed pay 6% and 2% through Class 4. You stop paying National Insurance altogether once you reach State Pension age, whatever your earnings.
The short answer
- Employees pay 8% National Insurance on earnings between £12,570 and £50,270, then 2% above: the rate falls, unlike income tax.
- The self-employed pay Class 4 at 6% and 2% through Self-Assessment; compulsory Class 2 has largely gone.
- You pay nothing below £12,570, and nothing at all once you reach State Pension age.
National Insurance (NI) is a second tax on earned income, sitting alongside income tax but working slightly differently. For an employee, the amount you pay depends on how much you earn between two thresholds. In 2026/27 you pay nothing on the first £12,570 of earnings (the primary threshold, aligned with the personal allowance), then 8% on earnings between £12,570 and £50,270, and just 2% on anything above £50,270. Unlike income tax, the rate actually falls on your highest earnings.
This is Class 1 National Insurance, deducted automatically from your pay through PAYE, you never have to calculate or hand it over yourself. Your employer also pays a separate employer’s National Insurance contribution on top (15% above a £5,000 threshold from April 2025), but that’s their cost, not a deduction from your wage.
National Insurance is worked out on each pay period, not annually, which can catch people out. If you’re paid monthly, the thresholds are simply divided by twelve, you pay nothing on the first £1,048 or so a month, then 8% up to about £4,189, then 2% above. That means a one-off bonus can attract more NI in the month it’s paid than a steady salary would, and someone with variable or seasonal earnings may pay more over the year than an employee on the same annual total paid evenly.
National Insurance rates for 2026/27
| Earnings / profits | Employee (Class 1) | Self-employed (Class 4) |
|---|---|---|
| Up to £12,570 | 0% | 0% |
| £12,570 to £50,270 | 8% | 6% |
| Over £50,270 | 2% | 2% |
A worked example for employees
Suppose you earn £40,000 a year. You pay no NI on the first £12,570, then 8% on the remaining £27,430, a National Insurance bill of about £2,194 for the year, or roughly £183 a month. Earn £60,000 and you’d pay 8% on the band up to £50,270 (about £3,016) plus 2% on the £9,730 above it (about £195), totalling around £3,211. Because the rate drops to 2% above £50,270, NI takes a smaller bite of each extra pound once you’re a higher earner, the opposite of how income tax behaves.
If you’re self-employed
The self-employed pay Class 4 National Insurance on their profits: 6% on profits between £12,570 and £50,270, and 2% above that. It’s calculated through your Self-Assessment tax return and paid alongside your income tax. The old flat-rate Class 2 contribution is no longer compulsory, since April 2024, self-employed people with profits above £6,725 are treated as having paid it and still build up their State Pension record, while those below that level can pay Class 2 voluntarily to protect their entitlement.
This voluntary route matters more than it sounds. If a self-employed person has a lean year with profits under £6,725, paying a few pounds a week in voluntary Class 2 can secure a full qualifying year towards the State Pension, one of the best-value deals in the tax system, since one cheap year can add hundreds of pounds a year to your pension for life. Company directors paying themselves through dividends should be especially alert, because dividends carry no National Insurance and can quietly leave gaps in their record.
It stops at State Pension age
Once you reach State Pension age you stop paying National Insurance entirely, even if you carry on working. Pension income is never subject to NI either, so a working pensioner keeps more of each pound than a younger colleague on the same salary.
What your contributions buy
National Insurance isn’t just another tax: your record of contributions determines what you can claim from the State. Most importantly, you generally need about 35 qualifying years to receive the full new State Pension, and at least 10 years to receive any at all. Contributions also underpin entitlement to certain contribution-based benefits, from statutory maternity pay to some jobseeker’s and bereavement support. You can also earn qualifying years without paying anything: National Insurance credits are awarded automatically while claiming Child Benefit for a child under 12, or when receiving certain carer’s or disability benefits, which protects parents and carers who step back from paid work.
If you do have gaps, from years abroad, caring, self-employment or simply low earnings, it can be worth paying voluntary contributions to fill them, and you can check your record and any shortfall on GOV.UK. The value can be striking: a single voluntary year often costs a few hundred pounds but can repay itself within three years of retirement. This is information, not personal advice; a vetted, FCA-regulated adviser matched free through Vetted Wealth can help you weigh it up as part of broader tax and retirement planning.
In summary
- Employees pay 8% National Insurance on earnings between £12,570 and £50,270, then 2% above: the rate falls, unlike income tax.
- The self-employed pay Class 4 at 6% and 2% through Self-Assessment; compulsory Class 2 has largely gone.
- You pay nothing below £12,570, and nothing at all once you reach State Pension age.
- Your NI record determines your State Pension, roughly 35 years for the full amount, so filling gaps can pay off.
Sources and further reading
- Income Tax rates and allowances GOV.UK
- Capital Gains Tax GOV.UK
- Self Assessment GOV.UK
Read the full guide
For the complete picture, see our in-depth guide: National Insurance Explained.
Speak to a vetted tax planning specialist
This is free information, not personal advice. When you’re ready, we’ll match you with an independently vetted, FCA-regulated specialist, free, and with no obligation.
