National Insurance (NI) is a UK payroll tax on earned income, separate from Income Tax. In 2026/27, employees pay 8% on earnings between £12,570 and £50,270, then 2% above £50,270. The self-employed pay Class 4 at the same rates. Your NI record determines your future State Pension entitlement.
The five NI classes (2026/27)
| Class | Who pays | 2026/27 rate |
|---|---|---|
| Class 1 (employees) | Employed earners | 8% (£12,570-£50,270), 2% above |
| Class 1A (employer) | Employer on BIKs | 15% of cash equivalent |
| Class 1B | Employer on PSA items | 15% |
| Class 2 | Self-employed (abolished from Apr 2024 for most) | Voluntary £3.60/week if profits under £6,725 |
| Class 3 | Voluntary top-ups | £18.40/week (£956.80 a year) |
| Class 3A | Historic (closed) | n/a |
| Class 4 | Self-employed | 6% (£12,570-£50,270), 2% above |
You stop paying NI when you reach State Pension age, regardless of whether you keep working. The threshold is £12,570 for both Class 1 and Class 4 — the same as the Income Tax Personal Allowance, by design.
How NI affects your State Pension
Your NI record determines two things:
- State Pension qualifying years — you need at least 10 years of NI contributions or credits to get any State Pension, and 35 years to get the full new State Pension (£237.46/week in 2026/27, ~£12,348/year).
- Specific benefit eligibility — contribution-based JSA, Maternity Allowance, Bereavement Support all check your NI record across the previous 2-3 tax years.
The should I top up state pension page works through the decision framework. The State Pension forecast calculator projects your eventual pension based on your record.
NI vs Income Tax — six key differences
| Aspect | Income Tax | NI |
|---|---|---|
| Threshold | £12,570 | £12,570 (PT) |
| Top rate kicks in at | £125,140 (45%) | £50,270 (drops to 2%) |
| Applies to pensions in payment? | Yes | No |
| Applies after State Pension age? | Yes | No |
| Reduces with pension contributions? | Yes (relief at marginal rate) | Only with salary sacrifice |
| Builds entitlement? | No | Yes (State Pension) |
The "drops to 2%" feature at £50,270 is unusual. It means high earners pay a smaller NI marginal rate than basic-rate earners (2% vs 8%) — though their income tax marginal rate is higher. The combined effect for higher earners: 42% combined marginal on the £50,270-£100,000 slice, vs 28% combined on the £12,570-£50,270 slice.
Common NI mistakes
Check your full UK take-home
The tax calculator handles all NI classes, Scotland, student loans and salary sacrifice. See your real net pay for any scenario.
Open the UK tax calculator →Sources and methodology
NI rates, thresholds and class definitions from gov.uk/national-insurance-rates-letters. State Pension qualifying years from gov.uk/new-state-pension. Voluntary Class 3 rules from gov.uk/voluntary-national-insurance-contributions.
UK Tax Drag is not authorised by the Financial Conduct Authority and does not provide regulated financial advice — see the content disclaimer for the full position. The methodology page documents how every calculator is built and reviewed.
Related
- State Pension forecast calculator — project your eventual State Pension from your NI record
- Should I top up state pension? — voluntary contributions decision framework
- UK take-home tax calculator — see NI deducted alongside income tax
- Sole trader tax calculator — Class 4 NI included for self-employed
- Full UK money glossary
- FAQ library
How UK Tax Drag holds itself to account
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