National Insurance bands explained

How employee National Insurance works

Employees pay Class 1 National Insurance on their earnings. For 2026/27 there is no NI on the first £12,570 (the Primary Threshold), 8% on earnings between £12,570 and £50,270 (the Upper Earnings Limit), and 2% on everything above £50,270.

Unlike Income Tax, National Insurance is normally worked out on each pay packet rather than across the whole year, so a one-off spike in pay can be charged more NI than an even salary.

Why NI ignores your Personal Allowance

National Insurance has its own threshold and is not reduced by the Personal Allowance or its £100,000 taper. That is why NI can start at a different point to Income Tax, and why the two deductions rarely match.

Employer National Insurance

Your employer also pays secondary Class 1 National Insurance on your earnings. It is a cost to them, not a deduction from your pay, but it is why salary sacrifice — which lowers the earnings NI is charged on — can benefit both you and your employer.

Frequently asked questions

Sources

• gov.uk — National Insurance rates for employees
• gov.uk — Rates and thresholds for employers 2026 to 2027 (Primary Threshold, Upper Earnings Limit, employer secondary rate)
• gov.uk — Rates and allowances: National Insurance contributions
• gov.uk — Salary sacrifice and the effects on PAYE

Related guides

• The UK tax year explainedWhy the tax year runs 6 April–5 April, and what 2026/27 changes.
• Student loan plans comparedThresholds and rates for every UK student loan plan, side by side.
• Salary sacrifice explainedHow giving up gross pay for a benefit can lower your tax and NI.