National Insurance rates 2025/26

National Insurance is calculated on earnings above certain thresholds. For 2025/26 the key Class 1 rates and thresholds are:

BandAnnual earningsEmployee rateEmployer rate
Below Lower Earnings LimitUp to £6,3960%0%
Lower Earnings Limit to Primary Threshold£6,396 – £12,5700% (NI credit only)0%
Primary Threshold to Upper Earnings Limit£12,570 – £50,2708%13.8%
Above Upper Earnings LimitOver £50,2702%13.8%
Key 2025/26 Thresholds

Primary Threshold: £12,570/yr (£1,047.50/mo)  ·  Upper Earnings Limit: £50,270/yr (£4,189/mo)  ·  Secondary Threshold (employer): £9,100/yr (£758/mo)

Class 2 and Class 4 NI for the self-employed

Self-employed individuals pay two classes of NI: Class 2 is a flat rate of £3.45 per week (£179.40/year) if profits exceed the Small Profits Threshold of £12,570. Class 4 is charged on profits at 9% between £12,570 and £50,270, and 2% above £50,270.

Note: Class 2 NI was originally abolished in 2024 but reinstated for state pension credit purposes. For 2025/26, self-employed people with profits over £12,570 pay Class 2 voluntarily or mandatorily via Self Assessment.

How salary sacrifice saves NI

When you pay into a pension via salary sacrifice, your employer reduces your contractual salary and pays the equivalent directly into your pension. Because your reported salary is lower, both you and your employer pay less NI. This is different from a standard pension contribution, where you still pay NI on the full salary.

On a £40,000 salary with £2,000 of salary sacrifice, the employee saves £160 in NI (8% of £2,000) and the employer saves £276 (13.8% of £2,000). Some employers pass on their NI saving to employees, effectively boosting the pension contribution for free.

Frequently asked questions

Does National Insurance affect my State Pension?
Yes — your entitlement to the State Pension is based on your NI record. You need 35 qualifying years of NI contributions (or credits) for the full new State Pension (£221.20/week in 2025/26). A minimum of 10 qualifying years gives you a partial pension. Years when you earn between the Lower Earnings Limit and Primary Threshold count as qualifying years even though no NI is actually paid — this protects low earners’ pension records.
Do I pay NI on pension income or savings?
No. National Insurance is only charged on earned income — employment and self-employment income. Pension income, savings interest, dividends, and rental income do not attract NI. This is one reason why drawing income from a pension or through dividends (for company directors) can be more NI-efficient than taking a salary.
When do I stop paying NI?
You stop paying Class 1 employee NI when you reach State Pension age (currently 66). Employers continue to pay employer’s NI regardless of the employee’s age. Self-employed people also stop paying Class 4 at State Pension age. You stop paying Class 2 at the same time.
What changed for NI in 2024/25 and 2025/26?
Employee NI was cut from 12% to 10% in January 2024, and again to 8% from April 2024. The employer NI rate was increased from 13.8% to 15% from April 2025 in the Autumn Budget 2024, and the secondary threshold was lowered from £9,100 to £5,000 per year. This means employers pay significantly more NI per employee in 2025/26 — an important cost consideration for businesses and a factor in some employers reducing headcount or hours.