What is the National Insurance threshold for 2026/27?

The Primary Threshold for 2026/27 is £12,570 per year (£1,047.50 per month). You do not pay any employee National Insurance below this amount.

What is the NI rate for 2026/27?

The main employee NI rate for 2026/27 is 8% on earnings between £12,570 and £50,270. Above £50,270 (the Upper Earnings Limit) the rate drops to 2%.

Does salary sacrifice reduce National Insurance?

Yes. Salary sacrifice pension contributions reduce your gross salary for NI purposes, meaning you pay NI on a lower figure. This is one of the key advantages of salary sacrifice over net pay pension arrangements.

National Insurance

Q: Is National Insurance the same in Scotland?

Employee National Insurance contributions are the same across the UK including Scotland. NI is reserved to Westminster and not devolved. Scottish income tax rates differ, but NI rates do not.

UK NI rates and thresholds for 2026/27

Primary Threshold

£12,570

You start paying NI above this

Main Rate

On £12,570 – £50,270

Higher Rate

On earnings above £50,270

What is National Insurance?

National Insurance (NI) is a tax on earnings paid by employees, employers, and the self-employed. Unlike income tax, which funds general government spending, NI contributions build your entitlement to certain state benefits — most importantly the State Pension, Statutory Sick Pay, and Maternity Pay.

You need 35 qualifying years of NI contributions to receive the full new State Pension (currently £230.25 per week in 2026/27). Years below the Lower Earnings Limit (£6,396) don't count, but you're automatically credited for years in which you earn between £6,396 and £12,570.

Employees pay Class 1 National Insurance. Your employer also pays Class 1 employer NI contributions on top of your salary — this is a cost to them and doesn't come out of your pay, but it does affect how much employers are willing to offer in gross salary.

Employee NI Rates 2026/27

Earnings Band	Annual Range	Rate
Below Primary Threshold	Up to £12,570	0%
Main Rate	£12,570 – £50,270	8%
Above Upper Earnings Limit	Above £50,270	2%

These are employee (Class 1) rates. Employers pay a separate 13.8% on earnings above the Secondary Threshold (£9,100).

Worked Example — £35,000 Salary

Here's how NI is calculated on a £35,000 annual salary in 2026/27:

Gross salary £35,000

Less Primary Threshold − £12,570

NI-liable earnings £22,430

× 8% (main rate) = £1,794.40

On a £35,000 salary you'd pay £1,794.40 per year in National Insurance — around £149.53 per month. Use the salary calculator below to model your exact figure.

How NI Differs from Income Tax

Many people assume income tax and National Insurance work the same way. They're both deducted from your pay, but they have important differences:

Different thresholds: Income tax starts at the Personal Allowance (£12,570). NI also starts at £12,570 in 2025/26, but this alignment isn't always the case — it changed in 2022.
Different rates: Basic rate income tax is 20%. The main NI rate is 8%. Together they take 28% of earnings in the basic rate band.
NI stops at retirement: Once you reach State Pension age you no longer pay NI, even if you continue working.
NI funds specific benefits: Income tax goes into general Treasury funds. NI nominally funds the State Pension, NHS, and contributory benefits — though in practice it all goes into the same pot.
Scotland: Scottish income tax rates differ from England and Wales. NI rates are the same across the whole UK.

NI and Salary Sacrifice

If your employer offers a salary sacrifice pension scheme, your pension contributions come off your gross salary before both income tax and National Insurance are calculated. This means you save NI on your pension contributions — not just income tax.

For a basic rate taxpayer contributing £200 per month into a salary sacrifice pension:

You save 20% income tax: £40
You also save 8% NI: £16
The £200 pension contribution actually costs you just £144 in take-home pay

This is why salary sacrifice is generally more tax-efficient than a relief-at-source pension, where only income tax relief is reclaimed.

Frequently Asked Questions

Do I pay NI on my whole salary?

No. You only pay NI on earnings above the Primary Threshold (£12,570 in 2025/26). The first £12,570 is NI-free, regardless of how much you earn.

What is the Upper Earnings Limit?

The Upper Earnings Limit (UEL) is £50,270 in 2025/26. Between the Primary Threshold and the UEL you pay 8% NI. Above the UEL the rate drops to 2%. This "kink" in the rate means higher earners pay a lower effective NI rate than basic rate taxpayers.

Does NI affect my State Pension?

Yes. You need 35 qualifying years of NI contributions (or credits) to receive the full new State Pension. You need at least 10 qualifying years to receive any State Pension at all. You can check your NI record and State Pension forecast on the government's Check your State Pension service.

Is National Insurance the same in Scotland?

Employee NI rates are identical across the UK. Scotland has different income tax rates and bands, but NI is reserved to Westminster and not devolved.

Does salary sacrifice reduce my NI bill?

Yes — salary sacrifice reduces your gross pay for NI purposes. A basic rate taxpayer saving £200/month via salary sacrifice saves an extra £16/month in NI (8% × £200), on top of the income tax saving.

Use the full salary calculator to see your NI contributions alongside income tax, pension and student loan deductions — broken down monthly, weekly and daily.

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