How National Insurance works
The employee and self-employed rates, what it actually pays for, and the qualifying years you need for the state pension, in plain English.
National Insurance is a tax on earnings that builds your right to the State Pension and a few contribution-based benefits. Employees pay Class 1: nothing on the first £12,570 a year, 8% on earnings between £12,570 and £50,270, and 2% above that. The self-employed pay Class 4 at 6% on profits between £12,570 and £50,270, then 2% above. These are 2026/27 figures.
The short version
- National Insurance is a separate charge from income tax, with its own thresholds, and it goes towards the State Pension and some benefits.
- Employees pay Class 1: 8% on earnings between £12,570 and £50,270, then 2% above £50,270, charged on your full pay.
- The self-employed pay Class 4: 6% on profits between £12,570 and £50,270, then 2% above, with Class 2 now treated as paid once profits reach £7,105.
- You do not get it back as cash. You build qualifying years: 35 for the full new State Pension, at least 10 for any of it.
- These are 2026/27 figures and every number here is an estimate to plan with, not financial advice.
What National Insurance is
National Insurance is a tax on the money you earn from work, separate from income tax, that you pay to build your entitlement to the State Pension and certain benefits. The contributions are called National Insurance contributions, often shortened to NICs. You start paying once you are 16 or over and earning above a set threshold, and you stop when you reach State Pension age.
It is easiest to think of it as a second deduction sitting alongside income tax on your payslip. The two are worked out differently and on different thresholds, which is why your take-home pay is never a tidy round percentage of your salary. If you want to see both deductions on your own figure, the take-home pay calculator works out the lot in seconds, and our explainer on how take-home pay works walks through every line that comes off your gross salary.
The classes at a glance
National Insurance comes in classes, and which one you pay depends on how you earn: employed or self-employed. Employees pay Class 1, the self-employed pay Class 4, and Class 2 still exists for the self-employed but is now treated as paid automatically once profits reach £7,105 a year. Here are the 2026/27 rates and thresholds.
| Class | Who pays it | Charged on | Rate |
|---|---|---|---|
| Class 1 | Employees | £12,570 to £50,270 | 8% |
| Class 1 | Employees | Above £50,270 | 2% |
| Class 2 | Self-employed | Profits of £7,105 or more | Treated as paid (£0) |
| Class 4 | Self-employed | £12,570 to £50,270 | 6% |
| Class 4 | Self-employed | Above £50,270 | 2% |
There is also Class 3, which you can pay voluntarily to fill gaps in your record, and Class 1A and 1B, which employers pay on benefits and certain settlements. The two that matter for most working people are Class 1 and Class 4.
If you are employed
As an employee you pay Class 1 National Insurance: nothing on the first £12,570 you earn, 8% on earnings between £12,570 and £50,270, and 2% on anything above £50,270. It comes straight off your pay through Pay As You Earn (PAYE), the same system that takes your income tax, so you never handle it yourself.
The £12,570 line is called the primary threshold and the £50,270 line is the upper earnings limit. Notice that the rate drops to 2% above the upper earnings limit rather than rising, which is the opposite of income tax. Two more things set National Insurance apart from income tax: it is charged on your full salary rather than only the part above a personal allowance, and on the most common workplace pension setup it is not reduced by your pension contribution. The exception is salary sacrifice, which does cut National Insurance, covered in our piece on salary sacrifice.
| Earnings | Class 1 rate |
|---|---|
| Up to £12,570 | 0% |
| £12,570 to £50,270 | 8% |
| Above £50,270 | 2% |
Your tax code does not change your National Insurance, only your income tax, so the two figures on your payslip move independently. If you are not sure what the letters and numbers on yours mean, our guide to what your tax code means breaks it down.
If you are self-employed
If you are self-employed you pay Class 4 National Insurance on your profits: 6% on profits between £12,570 and £50,270, then 2% on profits above £50,270. You pay it through Self Assessment alongside your income tax, rather than monthly through payroll, so it lands as part of your annual tax bill.
Class 2 contributions used to be a separate flat weekly charge, but they are now treated as paid automatically once your profits reach £7,105 a year, so you owe nothing extra for them and still build your record. If your profits are below that small profits threshold, you can pay Class 2 voluntarily at £3.65 a week to keep your years qualifying, which can be worth doing to protect your State Pension. One thing to know: Class 4 contributions themselves do not count towards benefits, so it is the Class 2 element that protects your record when profits are low.
What it pays for
National Insurance contributions go towards the State Pension and a set of contribution-based benefits, not into a personal account. Most contributions feed the National Insurance Fund, which pays out State Pensions and benefits to people who qualify today. A share of receipts is also allocated to the NHS, but National Insurance is not a dedicated NHS tax, and the health service is funded mainly from general taxation.
According to gov.uk, your contributions count towards:
- the basic State Pension and the new State Pension
- the Additional State Pension
- New Style Jobseeker's Allowance
- contribution-based Employment and Support Allowance
- Maternity Allowance
- Bereavement Support Payment
Which benefits you can claim depends on the class you pay. Class 1 from employment counts towards the widest range, Class 2 from self-employment covers most of the same ground, and Class 4 on its own does not build benefit entitlement.
National Insurance and the state pension
Your National Insurance record decides how much State Pension you get. You usually need 35 qualifying years to receive the full new State Pension and at least 10 qualifying years to get any of it. A qualifying year is a tax year in which you paid or were credited with enough National Insurance, including years when you were getting certain benefits or National Insurance credits.
The full new State Pension is £241.30 a week in 2026/27. With fewer than 35 qualifying years you get a proportion of that, roughly in line with the years you have, down to nothing below 10 years. You can check your own record and forecast on gov.uk, and if you have gaps you may be able to fill them with voluntary Class 3 contributions. The State Pension is only one part of retirement income for most people, and our pension calculator shows how a workplace or personal pension can build on top of it.
Do you get it back?
No, National Insurance is not a savings pot you draw down later, and you do not get a refund of what you paid. The contributions you make today fund today's pensions and benefits, and in exchange you build your own record of qualifying years. The payback comes as future entitlement, most obviously the State Pension, rather than a cash return.
There is one common exception. If you have more than one job and pay too much National Insurance across them in a year, you can apply to HMRC for a refund of the overpayment. Outside that, the money is gone in the accounting sense, but the qualifying years it buys you are the point.
A worked example
Take an employee on a £40,000 salary in 2026/27. National Insurance is charged on the full salary, and only the slice above £12,570 is hit:
- First £12,570: 0%, so nothing.
- £12,570 to £40,000: that is £27,430 charged at 8%, which is £2,194.40.
- Above £50,270: nothing, because the salary does not reach the upper earnings limit.
So the year's Class 1 National Insurance is about £2,194, or roughly £183 a month, on top of income tax. A self-employed person with £40,000 of profit would instead pay Class 4 at 6% on the same £27,430, which is £1,645.80, plus their income tax through Self Assessment. To see National Insurance and income tax together on your own salary, run the figure through the take-home pay calculator. These are estimates to help you plan, not financial advice.
Common questions
- Do I get my National Insurance money back?
- No, you do not get National Insurance back as a lump sum. It is not a savings pot with your name on it. The contributions you pay fund today's benefits and state pensions, and in return they build your own record of qualifying years towards the new State Pension and a handful of contribution-based benefits. So the return is future entitlement, not a refund. If you overpay because you have more than one job, HMRC can repay the excess, but that is the only common way money comes back.
- What is the minimum salary to pay National Insurance?
- As an employee you start paying Class 1 National Insurance once you earn more than the primary threshold, which is £12,570 a year (about £242 a week) in 2026/27. Below that you pay nothing. If you are self-employed, you pay Class 4 contributions once your profits pass £12,570. Earning a little below the threshold can still protect your record in some cases, but you will not pay anything.
- How many years of National Insurance do I need for the full state pension?
- You usually need 35 qualifying years of National Insurance to get the full new State Pension, and at least 10 qualifying years to get any new State Pension at all. A qualifying year is one where you paid enough National Insurance, or were credited with it, for example while claiming certain benefits. With fewer than 35 years you get a proportion of the full amount. The full new State Pension is £241.30 a week in 2026/27.
- Do I pay National Insurance on my full salary, or just part of it?
- No. As an employee you pay nothing on the first £12,570, then 8% on earnings between £12,570 and £50,270, and 2% on anything above £50,270. Only the slices above each threshold are charged, so it is not a flat percentage of your whole salary. Unlike income tax, though, National Insurance is worked out on your full pay and is not reduced by a workplace pension contribution in most setups, and the personal allowance does not apply to it.
- Does National Insurance pay for the NHS?
- Only partly. The NHS is funded mainly from general taxation, but a portion of National Insurance receipts is allocated to the NHS each year. The bulk of National Insurance goes into the National Insurance Fund, which pays the State Pension and contribution-based benefits such as the New Style Jobseeker's Allowance and Maternity Allowance. So National Insurance is not a dedicated NHS tax, even though some of it does reach the health service.
- When do I stop paying National Insurance?
- You stop paying National Insurance when you reach State Pension age, even if you carry on working. Employees stop paying Class 1 from that point, and the self-employed stop paying Class 4 from the start of the next tax year (6 April) after they reach State Pension age. Income tax does not stop at the same point, so you can still owe tax on a pension or earnings after you have stopped paying National Insurance.
- Are these National Insurance figures exact?
- The rates and thresholds here are the 2026/27 figures published by gov.uk and HMRC, but the amount you personally pay depends on your earnings pattern across the year, whether you have more than one job, and your employer's payroll. Directors are worked out on an annual basis rather than per pay period, which can change the timing. Treat any numbers here as estimates to plan with, not financial advice, and check your payslip or your National Insurance record for your own position.
About this article
Written by the calcd team. We build UK money calculators and explain the numbers behind them in plain English. We checked the 2026/27 National Insurance rates and thresholds, the self-employed Class 2 and Class 4 figures, and the State Pension numbers in this article against gov.uk (HMRC) as the primary source. The figures here are estimates to help you plan, not financial advice. What you actually pay depends on your earnings pattern, whether you have more than one job, and your employer's payroll, so check your payslip or your National Insurance record, and confirm anything important with HMRC. Last updated June 2026.