Class 1 National Insurance
UK tax glossary · Last reviewed: April 2026
Employees pay 8% on earnings between the Primary Threshold (£12,570) and Upper Earnings Limit (£50,270), then 2% above. These are 2026/27 rates — they have changed frequently in recent years.
Employers pay separate employer Class 1 at 15% on earnings above the Secondary Threshold (£5,000 in 2026/27). The employer rate rose from 13.8% to 15% in April 2025, and the Secondary Threshold was reduced from £9,100 to £5,000.
NI appears as a separate line on your payslip from Income Tax. It counts toward State Pension and qualifying for certain benefits. Class 1 NI does not apply to pension income or investment income — only earned employment income.
Worked example
Salary: £38,000. Employee NI: (£38,000 − £12,570) × 8% = £25,430 × 8% = £2,034.40/year. Employer NI: (£38,000 − £5,000) × 15% = £33,000 × 15% = £4,950/year. Total NI cost: £6,984.40/year.
Common questions
Does employer NI come out of my wages?
No. Employer NI is a separate cost to the employer on top of your salary. It does not reduce your take-home pay directly, though it is one reason gross pay offers sometimes differ between employers for equivalent roles.
What is the Upper Earnings Limit and why does it matter?
Above £50,270 per year, the employee NI rate drops from 8% to 2%. This means high earners pay a lower marginal NI rate than basic-rate payers — a quirk of the NI system.
Related resources
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.