How National Insurance is worked out
National Insurance (NI) is a separate deduction from Income Tax that most working people pay on their earnings. If you are employed, you pay Class 1 National Insurance, and it is taken straight from your wages through PAYE before you are paid — you never handle it yourself.
For 2026/27 the rates work in bands, much like Income Tax. You pay nothing on the first £12,570 you earn in a year (this starting point is called the Primary Threshold). You then pay 8% on earnings between £12,570 and £50,270, and 2% on anything above £50,270. Notice that the rate falls to 2% at the top — unlike Income Tax, where the rate rises. Also unlike Income Tax, National Insurance does not share the wider personal allowance; it has its own threshold that starts fresh each year and is not spread across your other income.
You stop paying National Insurance altogether once you reach State Pension age, even if you carry on working — so an employee over State Pension age keeps their full salary free of NI.
Worked example: £45,000 salary
Take an employee earning £45,000 a year and under State Pension age:
• The first £12,570 is free of NI.
• The remaining £32,430 (from £12,570 up to £45,000) is charged at 8% = £2,594.
• Nothing is earned above £50,270, so the 2% band does not apply.
Total National Insurance for the year is about £2,594, or roughly £216 a month — an effective rate of around 5.8% of the full salary.
2026/27 employee NI rates
| Earnings | NI rate |
|---|---|
| Up to £12,570 (Primary Threshold) | 0% |
| £12,570 – £50,270 | 8% |
| Over £50,270 (Upper Earnings Limit) | 2% |
What your National Insurance pays for
National Insurance is not a general tax — it is tied to a record of contributions that helps decide what state benefits you can claim. Your NI payments count towards the State Pension, and towards certain contribution-based benefits such as contribution-based Jobseeker's Allowance, Employment and Support Allowance, Maternity Allowance and Bereavement Support Payment. Every year you pay enough NI, you build up a "qualifying year" on your record.
National Insurance and your State Pension
This is the part that matters most in the long run. To receive the full new State Pension you normally need around 35 qualifying years of National Insurance, and you generally need at least 10 qualifying years to get any State Pension at all. Years when you are employed and paying Class 1 NI usually count automatically. If you have gaps — for example from time abroad, low earnings or a career break — you may be able to fill them with voluntary contributions. You can check your own record and State Pension forecast for free on GOV.UK.
Employees, employers and the self-employed
This calculator shows Class 1 employee National Insurance only — the amount deducted from your wages. Your employer also pays a separate employer's National Insurance on top of your wage, which does not come out of your pay. If you are self-employed, National Insurance works differently and is paid through Self Assessment rather than PAYE — use our Self-Employed Tax Calculator for that. To see NI and Income Tax combined into a single take-home figure, use the Take-Home Pay Calculator.
Frequently asked questions
How much National Insurance will I pay on £45,000?
About £2,594 for 2026/27 — that is 8% of the £32,430 you earn between £12,570 and £45,000.
What are the NI rates for 2026/27?
Employees pay 8% on earnings between £12,570 and £50,270, and 2% above £50,270. Earnings below £12,570 are free of NI.
Why does the National Insurance rate drop to 2%?
National Insurance is designed so that the marginal rate falls once your earnings pass the Upper Earnings Limit of £50,270. Above that point you pay just 2% on the extra, rather than 8%.
Do I pay National Insurance over State Pension age?
No. Once you reach State Pension age you stop paying Class 1 National Insurance, even if you keep earning.
How many years of National Insurance do I need for the State Pension?
You normally need about 35 qualifying years for the full new State Pension, and at least 10 qualifying years to receive any State Pension. You can check your record on GOV.UK.
Is National Insurance different in Scotland?
No. National Insurance is the same across the whole UK. Only Income Tax bands differ in Scotland.
Is National Insurance the same as Income Tax?
No, they are separate. This calculator shows NI only — use the Take-Home Pay tool to combine Income Tax and NI.
Does my employer's National Insurance come out of my pay?
No. Employer's National Insurance is an additional cost paid by your employer on top of your salary. It does not reduce your take-home pay.