Tax and Salary
TL;DR
National Insurance contributions fund state pension, statutory sick pay, and other benefits. Employees pay Class 1 NI at 8% on earnings between £12,570 and £50,270 and 2% above £50,270. Employers pay Class 1 NI at 15% on earnings above £5,000 per employee per year from April 2025. Self-employed pay Class 4 NI only. Gaps in your NI record reduce your state pension; voluntary contributions can fill them.
National Insurance (NI) is a tax on earnings and profits that funds contributory benefits including the state pension, statutory maternity, paternity, and sick pay, and jobseeker's allowance. The NI system is separate from income tax but collected through the same PAYE and self-assessment mechanisms. Your NI record - the years in which you have made sufficient contributions or received NI credits - determines your entitlement to the state pension and certain other contributory benefits.
The NI system was significantly reformed in the 2024 Autumn Budget, which increased employer NI from 13.8% to 15% from April 2025 and reduced the employer NI threshold from £9,100 to £5,000 per employee per year. Class 2 NI for the self-employed was abolished from April 2024. This guide covers the current NI rates and thresholds for 2025/26, the different classes of NI, how NI affects state pension entitlement, and what to do if you have gaps in your record.
Key facts (2026)
- Employee Class 1 NI 2025/26: 8% on earnings from £12,570 to £50,270 per year; 2% on earnings above £50,270 (HMRC).
- Employer Class 1 NI 2025/26: 15% on employee earnings above £5,000 per year (secondary threshold). Employment Allowance reduces the employer NI bill by up to £10,500 for eligible employers (HMRC).
- Self-employed Class 4 NI 2025/26: 6% on profits between £12,570 and £50,270; 2% above £50,270. Class 2 NI abolished from April 2024 (HMRC).
- State pension NI qualifying years required: 35 for the full new state pension of £221.20 per week; minimum 10 qualifying years to receive any state pension (DWP).
- Voluntary Class 3 NI: £17.45 per week in 2025/26 to fill gaps in your record; gaps can be checked and filled via your personal tax account at gov.uk (HMRC).
Class 1 NI: employees and employers
Class 1 National Insurance is paid by both employees and employers on employment earnings. Employee contributions are deducted from gross pay by the employer through PAYE. In 2025/26, employees pay 8% on earnings between the primary threshold of £12,570 and the upper earnings limit of £50,270 per year; above £50,270, the rate drops to 2%. There is no NI on earnings below £12,570. Employers pay a separate employer NI contribution on the same earnings, but at a higher rate (15% from April 2025) and on a lower starting threshold (£5,000 per employee per year from April 2025, the secondary threshold). The employer NI charge applies to total payroll cost and is separate from - and in addition to - any income tax or employee NI deductions from the employee's pay. Employer NI is not deducted from the employee's salary; it is an additional cost on top of the salary paid by the employer directly to HMRC.
The employer NI increase from April 2025
The October 2024 Budget increased employer NI from 13.8% to 15% and reduced the secondary threshold from £9,100 to £5,000 per year per employee. The combined effect substantially increases the NI cost per employee, particularly for workers with lower earnings where the threshold reduction has the largest proportionate impact. An employer paying a worker £20,000 per year previously paid NI on £10,900 (£20,000 minus £9,100); from April 2025 they pay NI on £15,000 (£20,000 minus £5,000) at the higher 15% rate. The Employment Allowance, which allows eligible employers to reduce their NI bill by up to £10,500 per year, partly offsets this for smaller employers. The Employment Allowance was increased from £5,000 to £10,500 from April 2025, but it remains unavailable to employers where the only employee is a director who is a sole director of the company.
Class 4 NI for the self-employed
Self-employed individuals pay Class 4 NI on their taxable profits through self-assessment. In 2025/26 the rate is 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. Class 2 NI - the flat weekly charge of £3.45 previously paid by the self-employed - was abolished from April 2024. The abolition of Class 2 reduced the annual NI cost for self-employed individuals by approximately £179, but it also removed the main mechanism through which the self-employed built state pension entitlement for low-profit years. In years where profits are below the lower profits limit (£12,570), the self-employed now receive a NI credit automatically for state pension purposes, rather than needing to pay Class 2. This means low-profit years still count toward the state pension qualifying year total without requiring a voluntary NI payment, which was the key concern when Class 2 was abolished.
NI and state pension entitlement
Your state pension entitlement is based on your NI record: the number of qualifying years in which you paid or were credited with sufficient NI contributions. A qualifying year requires NI contributions or credits totalling at least 52 times the lower earnings limit for the year. Employees earning above the lower earnings limit (£6,396 per year in 2025/26) in any week automatically build a qualifying year. The full new state pension requires 35 qualifying years; you need at least 10 to receive any state pension at all. You can check your NI record and state pension forecast via your personal tax account at gov.uk. NI credits are awarded automatically in many circumstances where you are not earning: caring for a child under 12 (Child Benefit credits), carer's credits for caring 20 hours per week, periods of statutory sick pay, and unemployment while registered as jobseeking.
Filling gaps in your NI record
If your NI record has gaps - years where you did not earn above the lower earnings limit and did not receive NI credits - you can pay voluntary contributions to fill them and increase your state pension. Voluntary Class 3 NI costs £17.45 per week in 2025/26, or approximately £907 per year. The decision of whether to pay is usually straightforward if you have fewer than 35 qualifying years and are below state pension age: each additional qualifying year increases the state pension by approximately £6.32 per week (£221.20 divided by 35), worth £328 per year. The payback period on a one-year voluntary contribution is approximately two years and nine months of receiving the higher state pension, making it very cost-effective for most people who live beyond state pension age. Before paying, check your personal tax account to see exactly how many qualifying years you have, which years have gaps, and whether filling a particular gap would actually increase your entitlement (it will not if you already have 35 qualifying years).
Related guides
Frequently asked questions
What NI rate do employees pay in 2025/26?
Employees pay 8% NI on earnings between £12,570 and £50,270 per year (the primary threshold to the upper earnings limit), and 2% on earnings above £50,270. There is no NI on earnings below £12,570. These rates apply to Class 1 employee contributions deducted through PAYE. Your payslip should show the NI deduction each pay period alongside income tax.
Do I still pay NI after reaching state pension age?
No. Employees and self-employed individuals stop paying NI once they reach state pension age (currently 66), regardless of how much they earn. If you continue working after 66, your employer still pays employer NI on your earnings, but you as the employee do not. You can ask your employer to adjust your PAYE code once you reach state pension age; HMRC will issue an updated code automatically in most cases.
Can I get NI credits while not working?
Yes. NI credits are awarded automatically in several circumstances: you are claiming Child Benefit for a child under 12; you are a registered carer providing at least 20 hours per week of care to someone receiving certain disability benefits; you are receiving statutory sick pay; or you are registered as unemployed and actively seeking work. NI credits count toward qualifying years for state pension just as paid contributions do. Check your NI record at gov.uk to see whether credits have been correctly applied.
What is the Employment Allowance and who qualifies?
The Employment Allowance allows eligible employers to reduce their employer NI bill by up to £10,500 per tax year from April 2025. Most employers qualify provided their total employer NI liability in the previous tax year was below £100,000. Employers where the only employee is also a sole director of the company do not qualify. Claim the Employment Allowance through your payroll software or HMRC's PAYE online service at the start of each tax year.
How do I check my NI record and state pension forecast?
Log in to your personal tax account at gov.uk using your Government Gateway credentials. The NI record section shows each tax year from 16 onwards with its status: full, gap, or partial. The state pension forecast section shows your projected weekly state pension based on your current record and any projected future contributions. You can also call the Future Pension Centre (contact details at gov.uk) if you prefer to discuss your record by phone.
How we verified this guide
All NI rates, thresholds, and state pension rules were verified against HMRC NI rates for 2025/26, HMRC Employment Allowance guidance, DWP state pension qualifying years guidance, and HM Treasury Autumn Budget 2024 employer NI changes during May 2026. We do not accept payment from HMRC or payroll providers.
Primary sources
- HMRC - National Insurance rates and categories 2025/26
- Gov.uk - Check your National Insurance record
- Citizens Advice - National Insurance explained
- MoneyHelper - National Insurance guide
Last reviewed: May 2026.
