National Insurance (NI) is one of the UK's main taxes, yet it works very differently from Income Tax. Unlike Income Tax, which funds general public expenditure, NI is tied to specific entitlements: your record of NI contributions determines whether you qualify for the State Pension, Maternity Allowance, and certain other benefits. Understanding how NI works — and how to protect your record — matters throughout your working life.
What is National Insurance for?
NI contributions go into the National Insurance Fund, which finances:
- The new State Pension (currently £221.20 per week for 2025/26)
- Jobseeker's Allowance (contribution-based)
- Employment and Support Allowance (contribution-based)
- Maternity Allowance
- Bereavement benefits
Unlike income tax, where the amount you pay does not affect the services you receive, NI is structured as a contribution system. Your record of contributions — or credits where contributions are not due — determines whether you qualify for these benefits and at what rate.
Who pays National Insurance and when?
NI applies to those who are working and earning above the relevant thresholds, aged between 16 and State Pension age. Once you reach State Pension age, you stop paying NI even if you continue working. State Pension age is currently 66 for both men and women, rising to 67 between 2026 and 2028.
Both employees and employers pay NI on employment income. Self-employed people pay different NI classes on their business profits. Voluntary NI contributions can also be paid to fill gaps in your record.
Classes of National Insurance
| Class | Who pays | How paid | What it qualifies for |
|---|---|---|---|
| Class 1 (employee) | Employees on earnings above the Primary Threshold | Deducted through PAYE by employer | State Pension, JSA, ESA, maternity benefits |
| Class 1 (employer) | Employers on employee earnings above Secondary Threshold | Paid by employer through PAYE | N/A — employer cost only |
| Class 2 | Self-employed (voluntary since April 2024) | Via Self Assessment | State Pension if paid voluntarily; automatic credits if profits above Small Profits Threshold |
| Class 3 | Voluntary contributions to fill gaps | Direct payment to HMRC | State Pension |
| Class 4 | Self-employed on profits above Lower Profits Limit | Via Self Assessment | Does not directly qualify for benefits |
Employee NI rates 2026/27
Employee NI (Class 1) is deducted from wages before payment. The rates and thresholds for 2026/27 are:
| Weekly earnings | Annual equivalent | NI rate |
|---|---|---|
| Up to £242 (Lower Earnings Limit) | Up to £12,570 | 0% (but you receive NI credits) |
| £242 to £967 (Primary Threshold to UEL) | £12,570 to £50,270 | 8% |
| Over £967 (above Upper Earnings Limit) | Over £50,270 | 2% |
The 8% employee NI rate applies on earnings between the Primary Threshold (£12,570 per year) and the Upper Earnings Limit (£50,270 per year). Above the UEL, the rate drops sharply to 2%. This means employees earning over £50,270 pay a lower marginal NI rate on their additional earnings — unlike income tax, which continues to increase at 40% for higher earners.
Employer NI rates 2026/27
Employers pay NI on employee earnings above the Secondary Threshold. For 2026/27, employer NI is charged at 15% on earnings above £5,000 per year (£96.15 per week). This rate increased from 13.8% and the threshold decreased from £9,100 in April 2025, substantially increasing the cost of employment for businesses.
There is no Upper Earnings Limit for employer NI — the 15% rate applies on all earnings above £5,000 regardless of how high the salary goes. This makes employer NI a proportionally significant cost for higher-paid employees.
National Insurance for the self-employed
Self-employed people (sole traders and partners) pay two types of NI through Self Assessment:
Class 2 NI (voluntary from April 2024)
Class 2 NI was compulsory for self-employed people until April 2024, when it became voluntary for most. However, if your profits exceed the Small Profits Threshold (£6,725 for 2025/26), you automatically receive Class 2 NI credits as part of your Self Assessment — meaning your State Pension record is protected without a separate payment.
If your profits are below £6,725, you can pay voluntary Class 2 NI at £3.50 per week (2025/26) to protect your State Pension record. This is significantly cheaper than voluntary Class 3 contributions.
Class 4 NI
Class 4 NI is charged on your taxable self-employment profits. For 2025/26 and 2026/27:
| Profit band | Class 4 rate |
|---|---|
| Up to £12,570 | 0% |
| £12,570 to £50,270 | 6% |
| Over £50,270 | 2% |
Class 4 NI is calculated automatically through Self Assessment. It does not build entitlement to the State Pension or other contributory benefits — only Class 2 credits and contributions do that. Class 4 is essentially an additional tax on self-employment profits.
Read the detailed guide: National Insurance for the self-employed
NI and the State Pension
To receive the full new State Pension (£221.20 per week in 2025/26), you need 35 qualifying years of NI contributions or credits. A qualifying year is any tax year in which you have NI contributions (or credits) recorded above the Lower Earnings Limit.
You need a minimum of 10 qualifying years to receive any State Pension at all. Between 10 and 35 years, you receive a proportionate amount.
Check your NI record and State Pension forecast through your HMRC Personal Tax Account at gov.uk. The forecast shows how many qualifying years you have accumulated, how many more you need for the full pension, and your estimated weekly pension based on your current record.
National Insurance credits
NI credits count towards your State Pension and other contributory benefits in the same way as paid contributions, without requiring any payment. You receive NI credits automatically when:
- Claiming Child Benefit for a child under 12
- Receiving Jobseeker's Allowance or Employment and Support Allowance
- On statutory maternity, paternity, or adoption pay
- Receiving Carer's Allowance
- Receiving Universal Credit (in some circumstances)
Specified Adult Childcare Credits are available to grandparents and other family members who care for a child under 12 while the child's parent is working. These credits transfer from the parent to the carer. Eligible family members can claim these credits even if they are not working or receiving benefits.
Filling gaps in your NI record
If you have gaps in your NI record — years in which you neither paid NI nor received credits — you may be able to fill them with voluntary Class 3 NI contributions. The rate for voluntary Class 3 NI is £18.40 per week (£957 per year) for 2025/26 and 2026/27.
You can generally pay voluntary NI to fill gaps going back six years. HMRC has periodically extended this deadline — check the current position on GOV.UK before assuming gaps are unrecoverable. For gaps linked to certain periods of self-employment where the voluntary Class 2 rate applied, the cost may be much lower than Class 3.
Whether filling gaps is worthwhile depends on how close you are to State Pension age and how many qualifying years you already have. For someone with 30 qualifying years and 10 years to retirement, each additional qualifying year costs around £957 and increases the State Pension by approximately £5.82 per week. The payback period is under 10 years — making it an excellent return in most cases.
Company directors and NI
Directors are employees of their own companies, which creates specific NI considerations. NI for directors is typically calculated on an annual basis rather than per pay period, which can be beneficial when a director receives a low monthly salary (or no salary for part of the year) and then a year-end bonus.
The annual cumulative method means that NI is calculated on the total earnings for the year as a whole, rather than potentially triggering the employer NI Secondary Threshold on individual pay runs. This is particularly relevant when directors set their salary below the Secondary Threshold to avoid employer NI (whilst ensuring at least the Lower Earnings Limit is met to protect their State Pension record).
Key takeaways
- National Insurance builds entitlement to the State Pension and certain benefits — you need 35 qualifying years for the full new State Pension (£221.20 per week in 2025/26).
- Employee NI is charged at 8% on earnings between £12,570 and £50,270, then 2% above £50,270. Employer NI is 15% on all earnings above £5,000 per year.
- Self-employed people receive automatic NI credits if profits exceed £6,725 — protecting the State Pension record without a separate payment.
- Class 4 NI (6% on self-employed profits between £12,570 and £50,270) does not qualify for benefits — only Class 2 credits and voluntary Class 3 do.
- You can fill gaps in your NI record with voluntary Class 3 contributions at £18.40 per week — often a high-return investment if you are short of qualifying years.
Frequently asked questions
Do I still pay National Insurance after I reach State Pension age?
No. Once you reach State Pension age, you stop paying employee NI contributions even if you continue working. Your employer, however, continues to pay employer NI on your earnings. If you are self-employed, you stop paying Class 4 NI from the start of the tax year in which you reach State Pension age.
What is the National Insurance threshold for 2026/27?
The Primary Threshold (the point at which employee NI starts) is £12,570 per year (£242 per week) for 2026/27. The Secondary Threshold (at which employers start paying NI) is £5,000 per year (£96.15 per week). These thresholds differ from each other and from the Income Tax Personal Allowance, reflecting the separate nature of the two taxes.
Can I claim the State Pension if I have fewer than 35 qualifying NI years?
You can claim a partial State Pension if you have at least 10 qualifying years. Between 10 and 35 years, you receive a proportionate amount — for example, 20 qualifying years gives you 20/35 of the full pension. Below 10 qualifying years, you receive no State Pension at all. Voluntary NI contributions can be used to fill gaps and increase your pension entitlement up to the 35-year maximum.
Is National Insurance the same as Income Tax?
No. National Insurance and Income Tax are separate taxes with different thresholds, rates, and purposes. NI funds specific contributory benefits including the State Pension. Income Tax funds general government expenditure. Both are collected through PAYE for employees, which is why they appear together on your payslip, but they are calculated independently using different thresholds and rates.
What happens to my NI contributions if I take time off to care for a child?
If you claim Child Benefit for a child under 12, you receive Class 3 NI credits automatically — your State Pension record is protected without any payment. If a grandparent or other family member provides childcare while the parent works, they can claim Specified Adult Childcare Credits, transferring the credit from the parent to the carer so the carer's pension record is protected instead.