How National Insurance Works in the UK (2025–26)
Last updated: June 2025
National Insurance (NI) is a separate deduction from income tax that funds the State Pension and certain benefits. If you are an employee, you pay Class 1 NI automatically through PAYE. Here is how it is calculated for 2025–26.
Class 1 National Insurance rates
For employees in 2025–26, National Insurance is charged as follows:
- 0% on earnings up to £12,570 per year
- 8% on earnings between £12,570 and £50,270
- 2% on earnings above £50,270
NI is calculated on your gross earnings before income tax, and unlike income tax it does not have a cumulative annual allowance — it is assessed per pay period.
What National Insurance pays for
Your NI contributions build up your entitlement to the State Pension and certain contributory benefits. You generally need 35 qualifying years of contributions to receive the full new State Pension.
NI vs income tax
NI and income tax are separate systems with different thresholds and rules. Both appear on your payslip as distinct deductions. A pay rise can therefore increase both your income tax and your NI, which is why your take-home pay rises by less than the headline gross increase.
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