Tax Guide: National Insurance UK 2025/26 — Classes, Rates, Thresholds and What You Pay

National Insurance contributions, as detailed by HMRC (gov.uk/national-insurance-rates-letters) (NICs) are a payroll tax paid by employees, employers and self-employed workers in the UK. Unlike income tax, which goes into the general Treasury pot, NICs are ring-fenced — at least in theory — to fund specific state benefits.

Your contributions build your entitlement to the State Pension, contributory Employment and Support Allowance (ESA), Maternity Allowance and bereavement benefits. You need 35 qualifying years of NICs to receive the full new State Pension (currently £2 — check your forecast at GOV.UK (gov.uk/check-state-pension)21.20 per week), and at least 10 qualifying years to receive anything at all.

National Insurance was introduced in 1911 as a contributory social insurance scheme, and the 'contributory principle' remains — you pay in, and in return you qualify for benefits. In practice, though, NI has become increasingly similar to income tax, with both taxes deducted via PAYE and both based on your earnings. The key difference is that you stop paying employee NI when you reach State Pension age, whereas income tax continues indefinitely.

You may also find our guide to Child Benefit UK 2025/26 useful.

National Insurance is divided into four classes, each covering different types of workers:

Class 1 — Employees The most common class. If you're employed and earn above the Primary Threshold (£242 per week, equivalent to £12,570 per year), your employer deducts Class 1 NICs from your wages through PAYE. Your employer also pays their own Class 1 contributions on your earnings — a cost that comes on top of your salary.

Class 2 — Self-employed (flat rate) If you're self-employed with profits above the Small Profits Threshold (£6,845 per year for 2025/26), you're liable for Class 2 NICs at a flat rate of £3.50 per week. Since April 2024, Class 2 has been reformed — most self-employed people no longer need to pay it directly, as their NICs record is credited automatically. However, those with profits below the threshold can still pay voluntarily to build up their State Pension entitlement.

Class 3 — Voluntary contributions Anyone can pay Class 3 contributions to fill gaps in their National Insurance record. At £17.75 per week for 2025/26, this is particularly valuable for people who've taken career breaks, lived abroad, or been a carer. A single year of voluntary contributions costs around £923 but could add roughly £328 per year to your State Pension — a payback period of under three years.

Class 4 — Self-employed (profit-based) Self-employed people also pay Class 4 NICs on their taxable profits, calculated through Self Assessment. For 2025/26, the rate is 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270.

Here are the key National Insurance rates and thresholds for the 2025/26 tax year (6 April 2025 to 5 April 2026):

Employee (Class 1) rates:

• 8% on earnings between the Primary Threshold (£12,570/year) and the Upper Earnings Limit (£50,270/year)
• 2% on all earnings above the Upper Earnings Limit
• 0% on earnings below the Primary Threshold (but NI record credited if earning above the Lower Earnings Limit of £6,500/year)

Employer (Class 1) rates:

• 15% on earnings above the Secondary Threshold (£5,000/year) — increased from 13.8% after the Autumn Budget 2024
• The employer threshold was also cut sharply from £9,100 to £5,000, meaning employers pay NI on a much larger share of each worker's earnings

To put this in context: an employee earning £35,000 pays £1,794 in National Insurance for 2025/26. Their employer pays £4,500 in employer NICs on the same salary — a combined NI bill of £6,294. For a £50,000 salary, the employee pays £2,994 while the employer pays £6,750.

Self-employed rates:

• Class 2: £3.50 per week (£182/year) — paid only if profits are above £6,845
• Class 4: 6% on profits between £12,570 and £50,270; 2% above £50,270
• A self-employed person earning £35,000 profit pays approximately £1,346 in Class 4 NICs — noticeably less than an equivalent employee

Employee National Insurance rates have seen significant changes in recent years, driven by policy U-turns and fiscal pressures:

In April 2022, the then-Chancellor Rishi Sunak introduced a temporary 1.25 percentage point increase (from 12% to 13.25%) to fund health and social care — the so-called Health and Social Care Levy. This was reversed just seven months later by his successor Kwasi Kwarteng in the mini-Budget.

The rate then held steady at 12% until January 2024, when Jeremy Hunt cut it to 10% in the Autumn Statement. A further cut to 8% followed in the Spring Budget 2024, effective from April 2024. The 8% rate continues into 2025/26.

While employees have seen significant cuts, the employer side tells the opposite story. The Autumn Budget 2024 raised employer NICs from 13.8% to 15% and cut the employer threshold from £9,100 to £5,000 — the largest employer NI increase in decades. The Office for Budget Responsibility estimated this would raise £25 billion per year, making it the single biggest tax-raising measure of the parliament.

National Insurance and income tax are often confused because both are deducted from your pay packet, both are calculated on your earnings, and the thresholds are now aligned (the Primary Threshold and Personal Allowance are both effectively £12,570). But there are important structural differences:

Who pays: Everyone with taxable income pays income tax regardless of age. Employee NICs stop at State Pension age. Self-employed Class 4 NICs also stop after State Pension age.

What it funds: Income tax goes into general government revenue. NICs notionally fund the State Pension and contributory benefits through the National Insurance Fund, though in practice the distinction has eroded.

How it's calculated: Income tax uses a cumulative system — your Personal Allowance and tax bands are applied across all your income sources. National Insurance is calculated per job, so someone with two part-time jobs might not reach the threshold in either one and pay no NI, while paying income tax on their combined income.

Rates structure: The top rate of income tax is 45% (on income over £125,140). The top rate of employee NI is just 2% (on earnings above £50,270). This means high earners pay proportionally less NI as a percentage of income — making it a regressive element of the tax system.

For a deeper look at income tax bands and how PAYE works, see our companion guide.

If you have gaps in your National Insurance record — perhaps from time spent abroad, caring for family, or years of low earnings — you can pay voluntary Class 3 contributions to fill them. At £17.75 per week (£923 per year) for 2025/26, this is one of the best-value investments available for retirement planning.

Each qualifying year you add could increase your State Pension by approximately £6.29 per week (1/35th of the full rate of £221.20). That's £328 per year for the rest of your retirement — potentially tens of thousands of pounds over a typical retirement lasting 20+ years.

How to check your record: Visit the GOV.UK 'Check your National Insurance record' service to see how many qualifying years you have, whether there are gaps, and what your projected State Pension is. You can usually fill gaps going back six years, though a temporary extension currently allows some people to fill gaps back to April 2006.

Who gets NI credits automatically: You receive National Insurance credits (which count as qualifying years without paying) if you're claiming Child Benefit for a child under 12, receiving Jobseeker's Allowance or Employment and Support Allowance, or acting as a registered carer. Grandparents who care for grandchildren while the parent works can also apply for transferred credits.

If you're approaching State Pension age and are a few years short of the full 35 qualifying years, paying voluntary contributions is almost always worthwhile. The payback period is typically under three years, making it significantly better value than most pension top-ups.

This article is for informational purposes only and does not constitute regulated financial advice. Tax rules, thresholds and allowances are subject to change. For personalised advice on your tax position, consult a qualified tax adviser or financial adviser.