Tax year: 6 April 2026 to 5 April 2027
Applicable to: Employees, employers, company directors and self-employed individuals
National Insurance contributions (NICs) are paid by employees, employers and self-employed individuals, depending on earnings, profits and individual circumstances.
The rates and thresholds vary according to the type of National Insurance contribution. This factsheet summarises the key National Insurance rates and thresholds for the 2026/27 tax year.
Employee National Insurance – Class 1
Most employees pay Class 1 National Insurance through PAYE.
For a standard Category A employee, the main thresholds for 2026/27 are:
| Earnings | Employee NI Rate |
|---|---|
| Up to £12,570 per year | 0% |
| £12,571 to £50,270 | 8% |
| Above £50,270 | 2% |
National Insurance is normally calculated for each pay period rather than simply on annual earnings.
Key Employee NI Thresholds
| Threshold | Weekly | Monthly | Annual |
| Lower Earnings Limit | £129 | £559 | £6,708 |
| Primary Threshold | £242 | £1,048 | £12,570 |
| Upper Earnings Limit | £967 | £4,189 | £50,270 |
The Primary Threshold is the point at which most employees start actually paying employee National Insurance.
Employees earning at or above the Lower Earnings Limit may still receive National Insurance credits for benefit and State Pension purposes even where no employee NIC is payable.
Example – Employee National Insurance
Suppose a Category A employee earns £40,000 per year and receives their salary evenly throughout the year.
The first £12,570 is below the annual Primary Threshold.
The remaining:
£40,000 − £12,570 = £27,430
falls within the main 8% National Insurance band.
An approximate annual employee National Insurance amount would therefore be:
£27,430 × 8% = £2,194.40
This is an illustration only. Employee National Insurance is generally calculated separately for each pay period.
Employer National Insurance
Employers also pay Class 1 secondary National Insurance on employees’ earnings.
For 2026/27, the standard employer National Insurance rate is:
15%
The standard Secondary Threshold is:
| Period | Secondary Threshold |
| Weekly | £96 |
| Monthly | £417 |
| Annual | £5,000 |
For a standard employee, employer National Insurance is generally payable at 15% on earnings above the Secondary Threshold.
This is separate from the National Insurance deducted from the employee’s salary.
Example – Employer National Insurance
For an employee earning £30,000 per year, using the annual equivalent for illustration:
Earnings above the £5,000 Secondary Threshold:
£30,000 − £5,000 = £25,000
Approximate employer National Insurance:
£25,000 × 15% = £3,750
The actual liability will depend on the employee’s circumstances, National Insurance category and payroll calculation method.
Employment Allowance
Eligible employers may be able to reduce their employer Class 1 National Insurance liability by claiming the Employment Allowance.
For 2026/27, the Employment Allowance is:
£10,500
This can substantially reduce the employer National Insurance cost for qualifying small businesses.
Eligibility conditions apply.
In particular, a company where the only employee liable for secondary Class 1 National Insurance is also a director will generally not qualify for the Employment Allowance.
Company Directors
Company directors generally pay Class 1 National Insurance in a similar way to employees, but special rules apply.
Unlike most employees, directors have an annual earnings period for National Insurance purposes.
This is particularly relevant when deciding on a tax-efficient salary for owner-managed company directors.
Salary planning should take into account:
- employee National Insurance;
- employer National Insurance;
- Corporation Tax relief;
- Employment Allowance eligibility;
- Income Tax;
- qualifying earnings for State Pension purposes; and
- the director’s overall remuneration package.
The most tax-efficient salary will depend on the company’s and director’s particular circumstances.
Employees Under 21
Employers can benefit from a reduced employer National Insurance liability for qualifying employees under the age of 21.
For 2026/27, the Upper Secondary Threshold for employees under 21 is £50,270 per year.
Employer National Insurance is generally charged at:
- 0% up to the Upper Secondary Threshold; and
- 15% on earnings above that threshold.
The employee may still pay their own National Insurance in the normal way.
Apprentices Under 25
A similar employer National Insurance relief may apply to qualifying apprentices under age 25.
The Apprentice Upper Secondary Threshold for 2026/27 is:
£50,270 per year
Subject to the relevant conditions, employers generally pay:
- 0% employer NI up to the threshold; and
- 15% above the threshold.
Self-Employed National Insurance
Self-employed individuals generally pay Class 4 National Insurance based on their taxable trading profits.
For 2026/27, the main Class 4 rates are:
| Annual profits | Class 4 NI Rate |
| Up to £12,570 | 0% |
| £12,571 to £50,270 | 6% |
| Above £50,270 | 2% |
Class 4 National Insurance is normally calculated through the individual’s Self Assessment tax return.
Class 2 National Insurance
The way Class 2 National Insurance operates has changed.
For 2026/27, a self-employed individual with profits at or above the relevant Small Profits Threshold of £7,105 generally does not need to pay Class 2 contributions but is treated as having paid them for the purpose of protecting their National Insurance record.
Where profits are below the relevant threshold, voluntary Class 2 contributions may be possible if the eligibility conditions are satisfied.
This can be important for maintaining entitlement to certain contributory benefits, including the State Pension.
Class 1A National Insurance
Employers may have to pay Class 1A National Insurance on taxable benefits provided to employees and directors.
Examples can include:
- company cars;
- private medical insurance;
- certain beneficial loans; and
- other taxable benefits in kind.
The Class 1A National Insurance rate for 2026/27 is:
15%
Class 1A National Insurance is generally an employer liability rather than an amount deducted from the employee.
Class 1B National Insurance
Class 1B National Insurance can arise where an employer enters into a PAYE Settlement Agreement (PSA) with HMRC.
The Class 1B rate for 2026/27 is also:
15%
A PSA can allow an employer to settle the tax and National Insurance due on certain minor, irregular or impracticable benefits and expenses on behalf of employees.
Why National Insurance Planning Matters
National Insurance can represent a significant cost for both individuals and businesses.
For employers in particular, the combination of salary, employer National Insurance and pension contributions can significantly affect the overall cost of employing staff.
Areas worth reviewing can include:
- directors’ salary levels;
- Employment Allowance eligibility;
- salary versus pension contributions;
- benefits in kind;
- employment of apprentices and younger workers;
- payroll structure; and
- National Insurance records for self-employed individuals.
How Fair View Accounting & Tax Services Can Help
We can assist businesses and individuals with:
- PAYE and payroll;
- National Insurance calculations;
- directors’ salary planning;
- Employment Allowance claims;
- benefits in kind;
- P11D and Class 1A National Insurance;
- Self Assessment;
- self-employed National Insurance;
- payroll compliance; and
- tax-efficient remuneration planning.
Need help with payroll or National Insurance?
Contact us to discuss your circumstances and find out how we can help.
Important Information
This factsheet is intended as a general guide only and should not be regarded as personalised tax, accounting, pension or financial advice.
National Insurance treatment depends on individual circumstances, employment status and the relevant National Insurance category. Rates and legislation may also change.
Professional advice should therefore be obtained before taking or refraining from action based on the information contained in this factsheet.