March 2026

What Is National Insurance? UK Rates, Bands & Benefits Explained

A complete guide to National Insurance in the UK - who pays it, how much it costs, what it funds, and why it matters for your State Pension.

5 Mar 2026 · Money Meister · 13 min read

The Short Answer

National Insurance (NI) is a tax on your earnings that funds state benefits and builds your entitlement to the State Pension. As an employee in 2025-26 you pay 8% on earnings between £12,570 and £50,270, and 2% above £50,270. You need 35 qualifying years of contributions to receive the full State Pension. Use our UK Tax Calculator to see exactly how much NI you pay on your salary.

If you've ever looked at your payslip and wondered what "National Insurance" actually is and where it goes, you're far from alone. NI is one of the UK's biggest taxes - in 2025-26 it raises over £170 billion - yet most people have only a vague idea of what it does. Unlike income tax, which is simply a percentage of everything you earn, National Insurance has thresholds, classes, and a direct link to the benefits and pension you can claim later in life.

This guide explains exactly what National Insurance is, who pays it, the current 2025-26 rates and bands from GOV.UK, what you get in return, and how it interacts with your take-home pay. Try our UK Tax Calculator to see your exact National Insurance contributions, income tax, and take-home pay - broken down monthly and annually.

What Is National Insurance?

National Insurance is a compulsory tax on earnings introduced in 1911. Originally modelled as a social insurance scheme - you pay in, you get benefits out - it now feeds into general government revenue alongside income tax, VAT, and all other taxation. However, it retains one crucial feature that sets it apart from other taxes: your contributions build a personal record of qualifying years that determines your entitlement to the State Pension and certain other state benefits.

Key facts at a glance

Who pays: Employees, employers, and the self-employed aged 16 and over (below State Pension age)
When you start: Employees earning more than £242/week; self-employed with profits above £12,570/year
When you stop: When you reach State Pension age (currently 66)
Collected by: HMRC, via your employer's PAYE system (or Self Assessment for self-employed)
Your NI number: A unique reference (e.g. QQ 12 34 56 A) that tracks your entire contribution record - protect it like your passport

You can view the official overview of National Insurance on GOV.UK's National Insurance introduction page.

What Does National Insurance Contribute Towards?

While NI is not technically ring-fenced for specific spending, it builds your entitlement to a range of contributory benefits. The most important of these is the State Pension:

State Pension

Most important

The new State Pension (for those reaching pension age after April 2016) pays up to £221.20 per week in 2024-25. You need 35 qualifying years for the full amount, and a minimum of 10 qualifying years to receive anything at all. Each year you pay NI contributions (or receive NI credits) counts as one qualifying year.

Official GOV.UK guide to the new State Pension →

Jobseeker's Allowance (New Style)

New Style JSA is a contributory benefit for unemployed job-seekers. To qualify you generally need to have paid Class 1 NI contributions in two of the last three complete tax years. It pays up to £84.80 per week for up to 182 days regardless of your savings or partner's income.

Employment and Support Allowance (New Style)

New Style ESA supports people who cannot work due to illness or disability. As a contributory benefit, eligibility depends on your NI record - typically you need contributions in at least one of the last two complete tax years. It pays between £84.80 and £138.20 per week depending on your capability for work.

Maternity Allowance

Maternity Allowance is available to employed and self-employed women who don't qualify for Statutory Maternity Pay. You need at least 26 weeks of NI contributions in the 66 weeks before your baby's due date. It pays up to £184.03 per week (from April 2024) for up to 39 weeks.

Bereavement Benefits

Bereavement Support Payment is available to people whose spouse or civil partner died on or after 6 April 2017. The deceased must have paid NI contributions for at least 25 weeks in any one tax year (or died as a result of an accident at work). It pays a lump sum of up to £3,500 plus up to 18 monthly payments.

Important

National Insurance is not hypothecated - it doesn't go into a separate fund. Your contributions don't sit in a pot waiting for you to claim. Instead, they go into the government's consolidated fund and your personal NI record acts as a gateway determining your eligibility for the benefits listed above.

Employee National Insurance Rates 2025-26

Most employees fall under Category A - the standard NI category. The rates below apply from 6 April 2025 to 5 April 2026, as published on the GOV.UK National Insurance rates page:

Earnings band	Annual equivalent	NI rate (Cat A)
Up to £242/week	Up to £12,570	0%
£242.01 – £967/week	£12,570 – £50,270	8%
Above £967/week	Above £50,270	2%

Worked Example: £40,000 salary

Gross salary£40,000

0% on first £12,570/year£0

8% on £12,570 → £40,000 (£27,430)£2,194

Total NI contribution£2,194/year

Based on Category A rates, 2025-26 tax year. Calculate your exact figure →

GOV.UK Example

If you're in category A and earn £1,000 in a week, you pay nothing on the first £242, 8% (£58) on earnings between £242.01 and £967, and 2% (£0.66) on the remaining £33 above £967 - giving a total weekly NI payment of £58.66. Source: GOV.UK

Employer National Insurance Rates 2025-26

On top of what you pay, your employer pays their own separate NI contributions. Following the changes announced in the October 2024 Budget (effective April 2025), employer NI increased to 15% while the threshold at which employers start paying was reduced from £9,100 to £5,000 per year (£96/week).

Earnings band	Annual equivalent	Employer NI rate
Up to £96/week	Up to £5,000	0%
Above £96/week	Above £5,000	15%

What this means

For a £40,000 salary: Your employer pays 15% on £35,000 (earnings above £5,000) = approximately £5,250 per year in employer NI on top of your gross salary. This is a real cost to your employer but doesn't come out of your take-home pay.

The Employment Allowance allows eligible smaller businesses to reduce their employer NI bill by up to £10,500 per year (from April 2025).

Full employer rates by NI category are published on GOV.UK: National Insurance rates and categories.

Self-Employed National Insurance 2025-26

If you're self-employed, the rules are different. Class 2 NI (a flat weekly charge) was abolished from April 2024. You now only pay Class 4 NI, which is based on your annual profits:

Annual profits	Class 4 NI rate
Up to £12,570	0%
£12,570 – £50,270	6%
Above £50,270	2%

Note on pension qualifying years

Even though Class 2 NI has been abolished, self-employed people with profits above £6,845/year still earn qualifying years for the State Pension through their Class 4 contributions. Those with profits between £6,845 and £12,570 are treated as if they've paid Class 2, protecting their NI record without an actual payment.

Self-employed? Our Self-Employed Tax Calculator calculates your Class 4 NI alongside income tax and your take-home profit.

The Different NI Classes Explained

National Insurance is split into different "classes" depending on your employment status. Most people only ever encounter Class 1 and Class 4, but it helps to understand the full picture. You can read more on the official GOV.UK National Insurance classes page.

Class 1

Employees & Employers

The most common class. Employee (primary) contributions are deducted from pay by the employer. Employer (secondary) contributions are paid on top. Both are calculated on weekly or monthly earnings. Class 1 contributions build entitlement to the State Pension, JSA, and ESA.

Class 1A

Employer contributions on benefits

Paid by employers on the value of taxable benefits they provide to employees - e.g. company cars, private medical insurance, gym memberships. The rate is 15% from April 2025. Employers report these on a P11D form. Does not build employee entitlements.

Class 2

Abolished - previously for self-employed

Class 2 was a flat-rate weekly charge paid by the self-employed. It was abolished from 6 April 2024. Self-employed people now only pay Class 4 NI, and qualifying years are earned through Class 4 contributions.

Class 3

Voluntary contributions

You can pay Class 3 contributions voluntarily to fill gaps in your NI record. At £17.45/week (2025-26), filling one full year costs £907.40. Given that each additional qualifying year adds roughly £6.32/week to your State Pension, a gap year can pay back in under 3 years of retirement - making it excellent value. GOV.UK: Voluntary NI contributions

Class 4

Self-employed profits

Paid on annual self-employed profits above the Lower Profits Limit (£12,570). Rate is 6% up to £50,270 and 2% above. Calculated through Self Assessment and paid alongside income tax. Builds entitlement to the State Pension and certain contributory benefits.

NI Category Letters - Which One Are You?

Every employee is assigned an NI category letter by their employer. This determines which rate of employee and employer NI applies. Most people are Category A. The full list of category letters and rates is on GOV.UK: NI category letters.

Letter	Who it applies to	Employee rate (main band)
A	Most employees (standard category)	8%
B	Married women / widows with reduced election	1.85%
C	Employees above State Pension age	0%
H	Apprentices under 25 (employer pays 0% up to UEL)	8%
J	Employees deferring NI (multiple jobs)	2%
M	Employees under 21 (employer pays 0% up to UEL)	8%

NI Credits - Protecting Your Record When You're Not Working

You don't have to be earning and paying NI contributions to build qualifying years. NI credits can fill your record automatically in many circumstances:

Child Benefit

If you claim Child Benefit for a child under 12, you automatically receive NI credits even if you're not working. Critical for parents taking time out for childcare.

Sickness / incapacity

People receiving Statutory Sick Pay or ESA automatically receive NI credits, protecting their pension record during periods of inability to work.

Registered unemployed

People claiming Jobseeker's Allowance or signing on at the Jobcentre receive Class 1 credits for each week they are actively seeking work.

Caring responsibilities

Approved Foster Carers and those caring for someone for at least 20 hours per week can apply for Carer's Credit to fill gaps in their NI record.

You can check your full NI record and see any gaps at gov.uk/check-national-insurance-record.

Frequently Asked Questions

What is National Insurance and do I have to pay it?

National Insurance (NI) is a tax on earnings and profits paid by employees, employers, and the self-employed in the UK. It's mandatory if you're an employee earning more than £242 per week (£12,570/year) or self-employed with profits above £12,570 per year. You must also be 16 or over. If you earn between £125 and £242 per week, you won't pay NI but HMRC treats contributions as having been made, protecting your benefits record.

How much National Insurance do I pay as an employee in 2025-26?

As an employee in 2025-26 (Category A), you pay: 0% on earnings up to £12,570/year (£242/week), 8% on earnings between £12,570 and £50,270/year (£242–£967/week), and 2% on any earnings above £50,270/year. For example, on a £35,000 salary you'd pay approximately £1,908 in National Insurance contributions per year.

What does National Insurance pay for?

National Insurance contributions count towards several state benefits, most notably the State Pension. You need 35 qualifying years of NI contributions to receive the full new State Pension (£221.20/week in 2024-25). NI also builds your entitlement to: Jobseeker's Allowance, Employment and Support Allowance, Maternity Allowance, and Bereavement benefits. Despite the name, NI isn't ring-fenced - it flows into general government revenue and helps fund all public services.

How many qualifying years do I need for the full State Pension?

You need 35 qualifying years of National Insurance contributions or credits to receive the full new State Pension. You need a minimum of 10 qualifying years to receive any State Pension at all. A 'qualifying year' is a tax year in which you either paid NI contributions, received NI credits (e.g. when unemployed, caring for children, or on certain benefits), or paid voluntary Class 3 contributions.

What is an NI category letter and which one am I?

Every employee is assigned an NI category letter which determines the rate of NI deducted. Category A is the standard letter applied to most employees. Category B applies to married women or widows with a valid election to pay a reduced rate. Category C applies to employees who have reached State Pension age and pay no NI. Category D, J, L and Z apply to employees who are deferring NI because they have more than one job. Your employer assigns your category - you don't choose it yourself.

Do I pay National Insurance when self-employed?

Yes. If you're self-employed with profits above £12,570/year, you pay Class 4 NI at 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. Class 2 NI (a flat weekly charge) was abolished from April 2024. You still earn qualifying years for the State Pension and other benefits through Class 4 contributions, provided your profits are above certain thresholds.

Can I make voluntary National Insurance contributions?

Yes. If you have gaps in your NI record - for example from periods of unemployment, living abroad, or low income - you can make voluntary Class 3 contributions to fill them. The Class 3 rate for 2025-26 is £17.45 per week (£907.40 per year). Filling gaps can be highly cost-effective if it helps you reach the 35 qualifying years needed for the full State Pension. You can check your record and identify gaps at gov.uk/check-national-insurance-record.

When do I stop paying National Insurance?

Employees stop paying Class 1 National Insurance when they reach State Pension age (currently 66 for both men and women). However, employers continue paying employer NI contributions on their earnings even after this age. Self-employed people stop paying Class 4 NI from the 6 April (start of the new tax year) after they reach State Pension age.

Does my employer also pay National Insurance?

Yes. Employers pay their own NI contributions on top of what you pay. From April 2025, employer NI is charged at 15% on employee earnings above £5,000/year (£96/week) - this threshold was reduced from £9,100 in the October 2024 Budget. Employer NI is a separate cost to the business and does not come out of your take-home pay, though economists argue it suppresses wage growth. On a £35,000 salary, your employer pays approximately £4,500 in employer NI contributions.

Is National Insurance the same as income tax?

No, though both are deducted from your pay via PAYE. Income tax funds general government spending with no eligibility conditions. National Insurance is a contributory system - what you pay determines your entitlement to certain benefits like the State Pension. In practice both flow into consolidated government revenue, but NI contributions build a 'qualifying years' record on your personal NI account. You can see both deductions separately on your payslip and P60.

Sources: GOV.UK - National Insurance, GOV.UK - National Insurance rates and categories, GOV.UK - National Insurance classes, GOV.UK - Voluntary NI contributions, GOV.UK - New State Pension, GOV.UK - Check your NI record