UK National Insurance 2026: Class 1, 2 & 4 Rates and Thresholds
What National Insurance funds and who pays it
National Insurance (NI) is the UK’s social-security contribution. It funds the State Pension, contribution-based benefits, statutory sick and maternity pay, and the NHS in part. Unlike income tax, NI is contribution-based — your NI record (years of qualifying contributions) directly determines your eligibility for the State Pension and several other benefits.
Three groups pay NI in 2026/27:
- Employees pay Class 1 Primary on earnings above a threshold.
- Employers pay Class 1 Secondary on the same earnings, at a separate rate.
- The self-employed pay Class 4 on profits and (in limited cases) Class 2 voluntarily for benefit credits.
NI is collected weekly or monthly in step with how often you’re paid, so the thresholds below appear both as weekly figures (the legal definition) and annual equivalents.
Class 1: employees
If you’re paid through PAYE, your employer deducts Class 1 Primary NI alongside income tax. The 2026/27 rates and thresholds:
| Earnings band (weekly) | Annual equivalent | Employee rate |
|---|---|---|
| Up to £242 (Primary Threshold) | Up to £12,570 | 0% |
| £242.01 – £967 (Upper Earnings Limit) | £12,570 – £50,270 | 8% |
| Above £967 | Above £50,270 | 2% |
A few key points:
- The Primary Threshold is aligned to the personal allowance — you start paying NI at the same pay point you start paying income tax.
- The 8% main rate applies through the basic-rate band and into the top of the higher-rate band; the rate then drops to 2% above the Upper Earnings Limit. This is the opposite of income tax, where rates rise with income.
- NI is a per-period charge, not annual. If you earn £20,000 over one month and nothing in the next, you pay more NI in total than if you earned £10,000 each month — even though your annual income is identical. This catches bonus months and irregular pay.
Worked example for £45,000 annual PAYE pay, paid monthly:
- Monthly gross: £3,750.
- Monthly Primary Threshold: £12,570 / 12 = £1,047.50.
- Monthly Upper Earnings Limit: £50,270 / 12 = £4,189.17.
- All earnings sit between PT and UEL → 8% on (£3,750 − £1,047.50) = 8% × £2,702.50 = £216.20 per month.
- Annual Class 1 NI: roughly £2,594.
Class 1 Secondary: employers
Your employer also pays NI on your earnings — Class 1 Secondary — at 15% above the Secondary Threshold of £96/week (£5,000/year). The Secondary Threshold was reduced from £9,100 in April 2025 as part of the Autumn Budget package, and the rate rose from 13.8% to 15%. Together these changes pushed up the cost of hiring substantially.
Employer NI is not a deduction from your gross pay — it’s a separate cost on top, payable by your employer. You don’t see it on your payslip, but it shapes pay decisions: when employers think about “total compensation cost”, they include employer NI, pension contribution, apprenticeship levy and any other on-costs.
The Employment Allowance lets eligible employers reduce their total Class 1 Secondary bill by up to £10,500 per year (from April 2025). Most small businesses qualify; companies whose director is the sole employee generally don’t.
Class 2: self-employed (mostly historic)
Class 2 NI was a flat weekly payment (around £3.45/week) historically required of all self-employed people whose profits exceeded a small profits threshold. From April 2024, mandatory Class 2 was abolished: profitable self-employed taxpayers automatically receive NI credits towards the State Pension without paying Class 2.
Class 2 still exists as a voluntary contribution for two groups:
- Self-employed people with profits below the Small Profits Threshold (around £6,725) who want to maintain a contributing NI record.
- People with gaps in their NI history who want to fill them to qualify for the full State Pension (you need 35 qualifying years for the full new State Pension).
Voluntary Class 2 is much cheaper than Class 3 (the alternative voluntary route for non-employed people), so if you’re eligible to pay Class 2 voluntarily and need to fill gaps, it’s usually the cheaper option. You pay it through your Self Assessment return.
Class 4: self-employed profits
If you’re a sole trader or partner with annual profits above the threshold, you pay Class 4 NI on those profits — calculated on the Self Assessment return and paid alongside income tax. The 2026/27 schedule:
| Annual profits | Class 4 rate |
|---|---|
| Up to £12,570 (Lower Profits Limit) | 0% |
| £12,570 – £50,270 (Upper Profits Limit) | 6% |
| Above £50,270 | 2% |
The pattern mirrors employee Class 1 — same thresholds, lower main rate (6% vs 8%), same 2% above the upper limit. The lower main rate reflects that the self-employed don’t accrue some employment-linked benefits (statutory sick pay, statutory maternity pay) that employees do.
Class 4 is calculated on net profits after allowable business expenses. Capital allowances reduce the profit figure too. So the NI base is generally smaller than the gross turnover.
Worked example for sole-trader profits of £42,000:
- £0 NI on the first £12,570.
- 6% × (£42,000 − £12,570) = 6% × £29,430 = £1,765.80 Class 4 NI.
Use the Self-Assessment Calculator to model the combined Income Tax + Class 4 NI + payments on account figure on any profit number.
Class 3: voluntary contributions for non-workers
If you’re not earning (career break, raising children outside Child Benefit-claiming years, living abroad with UK State Pension entitlement in mind), you can pay Class 3 voluntarily to maintain your NI record. Class 3 is the most expensive route — around £17.45/week in 2026/27 — but it’s the only option for people who can’t pay Class 2.
Whether Class 3 is worth paying comes down to State Pension arithmetic: each full year of contributions adds roughly £6/week to your eventual pension under the new State Pension formula. Pay the catch-up if you’d otherwise have fewer than 35 qualifying years at State Pension age.
You can buy up to 6 prior years of Class 3 contributions at any time. After that, there’s typically a specific extended window — check the GOV.UK voluntary contributions guidance for current deadlines.
How Class 1 and Class 4 interact for “side hustles”
If you have employment income (paying Class 1) and self-employment income (paying Class 4) in the same year, both apply. There’s an annual maximum across all NI classes, but it’s high enough that most people with mixed income simply pay both in full.
Two practical things to know:
- Your Self Assessment return calculates the Class 4 due on your self-employed profits and adds it to the total tax bill due 31 January.
- If you’ve over-paid NI overall — for example, you have multiple jobs and earnings in each push you above the Upper Earnings Limit several times — you can claim a refund using form CA5610. This is rare but real.
Frequently asked questions
Why does Class 1 drop to 2% above £50,270? The 2% rate is a relic of the original design — once you’ve contributed to the threshold for full State Pension qualification, the rate falls because additional contributions don’t add additional benefit entitlement. Politically the structure has been preserved despite multiple reform attempts.
Do I pay NI on pension income? No. NI applies to earned income only — employment earnings, self-employment profits, certain benefits in kind. Pension income (State Pension, private pension drawdown, annuities) is exempt from NI even though it’s subject to income tax.
Do I pay NI past State Pension age? Employee NI stops the week you reach State Pension age. Self-employed Class 4 NI stops in the tax year after you reach State Pension age. You can ask your employer for confirmation of your NI exemption — it should normally happen automatically.
Will my NI record show on my State Pension forecast? Yes. The “Check your State Pension forecast” service on GOV.UK lists every year of your NI record and tells you how many more qualifying years you need to reach the full new State Pension (£221.20/week for those reaching State Pension age after April 2026, though the figure increases each April with the triple lock).
Are statutory payments NI-able? Statutory Sick Pay, Statutory Maternity Pay, Statutory Paternity Pay and Statutory Shared Parental Pay are all subject to Class 1 NI when paid through employer payroll. The thresholds are the same.
Authoritative sources: GOV.UK National Insurance rates and categories and GOV.UK Self-employed National Insurance.