Rates & allowances
National insurance — UK rates and thresholds
Class 1, 1A, 2, 3 and 4 thresholds and rates for employees, employers and self-employed.
2026/27
NI — Employee (Class 1)
| Band | Rate | Notes |
|---|---|---|
| Up to £12,570 | 0% | Below primary threshold |
| £12,571 – £50,270 | 8% | Main rate |
| Over £50,270 | 2% | Above upper earnings limit |
NI — Self-employed (Class 4)
| Band | Rate | Notes |
|---|---|---|
| £12,571 – £50,270 | 6% | Main rate |
| Over £50,270 | 2% | Above upper profits limit |
2025/26
NI — Employee (Class 1)
| Band | Rate |
|---|---|
| Up to £12,570 | 0% |
| £12,571 – £50,270 | 8% |
| Over £50,270 | 2% |
National Insurance explained
National Insurance (NI) is paid by employees, employers and the self-employed and funds state benefits and the state pension. Employees pay Class 1 above a threshold, employers pay a secondary contribution, and the self-employed pay Class 4 on profits (with Class 2 in some cases). The tables above show the current thresholds and rates.
Getting NI right matters for payroll and for directors’ tax-efficient pay. Our payroll and personal tax services take care of it.
Why NI is not just another income tax
National Insurance is charged on earnings rather than on total income, which means it does not apply to dividends, rental profit or pension income. That single difference is behind most of the salary-and-dividend planning owner-managers do, and behind the fact that two people with the same income can pay very different amounts.
It is also assessed per employment and, for directors, on an annual basis rather than per pay period — which is why a director's deductions can look uneven through the year and still be right.
The employment allowance
Most smaller employers can reduce their employer's National Insurance bill by an annual allowance, but it has to be claimed rather than applied automatically, and a company whose only employee is a single director is generally excluded. First-time employers miss it regularly.
Frequently asked
Do the self-employed pay National Insurance?+
Yes — mainly Class 4 on profits above a threshold. The rules changed in recent years, so check the current position or ask us.
How is employer NI calculated?+
Employers pay a secondary contribution on earnings above the secondary threshold. Our payroll service calculates and files this for you.
Do I pay National Insurance on dividends?+
No. NI applies to earnings — salary and self-employed profits — not to dividends, rent or pension income. That difference is the main reason owner-managers take part of their income as dividends, though it has to be balanced against building a state pension record and against the corporation tax paid before the dividend.
What is the employment allowance?+
A reduction in the employer's NI bill available to most smaller employers. It has to be claimed, it is not applied for you, and a company whose only employee is a sole director generally cannot use it.
Rates in context
Knowing the rate is not the same as knowing the bill.
Thresholds interact — allowances taper, reliefs stack, and the order you take income in changes the total. We plan for that.
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