National Insurance rates and thresholds 2025-26

What National Insurance is

National Insurance is a payroll deduction that funds state benefits including the State Pension, statutory sick pay, and unemployment benefits. It is separate from income tax and has its own rates, thresholds, and rules.

Both employees and employers pay National Insurance, but only employee NI is deducted from your pay. Employer NI is an additional cost your employer pays on top of your salary.

Employee National Insurance rates for 2025-26

For most employees in category A (the standard category):

• Below the primary threshold (GBP 12,570 per year): 0 percent — no employee NI
• Between the primary threshold and upper earnings limit (GBP 12,570 to GBP 50,270): 8 percent
• Above the upper earnings limit (GBP 50,270+): 2 percent

What that means in practice

On a salary of GBP 40,000, employee NI is calculated as:

• GBP 0 on the first GBP 12,570
• 8 percent on the remaining GBP 27,430 = approximately GBP 2,194 per year

On a salary of GBP 60,000:

• GBP 0 on the first GBP 12,570
• 8 percent on GBP 37,700 (from GBP 12,570 to GBP 50,270) = approximately GBP 3,016
• 2 percent on GBP 9,730 (from GBP 50,270 to GBP 60,000) = approximately GBP 195
• Total employee NI: approximately GBP 3,211 per year

Employer National Insurance rates for 2025-26

Employer NI rates changed significantly from April 2025:

• Below the secondary threshold (GBP 5,000 per year): 0 percent
• Above the secondary threshold: 15 percent

The employer secondary threshold was reduced from GBP 9,100 to GBP 5,000 in April 2025, and the employer rate increased from 13.8 percent to 15 percent. This was one of the most significant payroll cost changes in recent years. See the employer NI increase guide for the full implications.

Practical takeaway: employer NI does not reduce your pay directly, but it increases your total employment cost. This matters when negotiating salary because it affects what employers can afford to offer.

How NI differs from income tax

| Feature | Income Tax | National Insurance | |---------|-----------|-------------------| | Charged on | Taxable income after allowances | Earnings between thresholds | | Personal allowance | GBP 12,570 (tapers above GBP 100k) | Primary threshold (GBP 12,570) | | Regional variation | Scotland has different rates | Same across the UK | | Higher-rate equivalent | 40 percent | 2 percent | | Salary sacrifice savings | Yes | Yes |

The key practical difference: NI drops to 2 percent above the upper earnings limit, while income tax jumps to 40 percent at the higher-rate threshold. This means the combined marginal rate actually increases at GBP 50,270 (from 28 percent to 42 percent) because income tax increases more than NI decreases.

How salary sacrifice reduces NI

When you make pension contributions through salary sacrifice, your contractual pay is reduced before NI is calculated. This means you save NI on the sacrificed amount, which is a benefit that does not apply to personal pension contributions made after tax.

At GBP 40,000, sacrificing GBP 5,000 to pension saves:

• 8 percent NI on GBP 5,000 = GBP 400 per year in employee NI
• 15 percent employer NI on GBP 5,000 = GBP 750 per year in employer NI (some employers share this saving)

This is one of the strongest reasons to prefer salary sacrifice over personal pension contributions. The salary sacrifice calculator shows the full effect.

NI and the State Pension

To qualify for the full new State Pension, you need 35 qualifying years of National Insurance contributions. A qualifying year requires earnings above the lower earnings limit (GBP 6,396 per year for 2025-26). You can check your NI record on the HMRC website.

What the calculators model

PayPath models employee National Insurance on an annual basis. The calculator applies the correct rates and thresholds for 2025-26 and shows NI as a separate line in the deductions breakdown. Employer NI is not shown in take-home calculations because it does not affect your pay, but it is relevant to total employment cost comparisons.

Practical steps

1. Run the take-home pay calculator to see your NI deduction alongside income tax 2. If you want to reduce NI, explore salary sacrifice — it is the only common way to reduce employee NI on employment income 3. If you earn above the upper earnings limit, note that additional income only attracts 2 percent NI but 40 percent income tax — the combined 42 percent is what matters for planning