Guide · Take-home pay

National Insurance explained for employees

How employee Class 1 National Insurance works, the 8% and 2% rates, the thresholds and a worked example on a £35,000 salary. Start by employees aged 16 to State Pension age pay Class 1 NI on earnings above the primary threshold. Over State Pension age you pay none.

By Uthman ChoudhuryPublished 20 September 2026Updated 20 September 2026

Skip the reading: use the Take-Home Pay Calculator for your own numbers.

How do you work out your National Insurance?

Check you are liable. Employees aged 16 to State Pension age pay Class 1 NI on earnings above the primary threshold. Over State Pension age you pay none.
Find your earnings for NI. Use gross pay after salary sacrifice. Net-pay and relief-at-source pension contributions do not reduce it.
Apply the main rate. Charge 8% on earnings between £12,570 and £50,270 a year (£1,048 to £4,189 a month).
Apply the upper rate. Charge 2% on anything above £50,270 a year.

What is Class 1 National Insurance?

National Insurance (NI) is a separate tax on earnings that funds the State Pension and some benefits. Employees pay Class 1 primary contributions, taken through PAYE; employers pay Class 1 secondary contributions on top. Unlike income tax it has no personal allowance and does not depend on your tax code, and it stops entirely once you reach State Pension age.

Class 1 National Insurance 2026/27
Who pays	Earnings	Rate
Employee	Up to £12,570 a year	0%
Employee	£12,571 to £50,270	8%
Employee	Above £50,270	2%
Employer	Above £5,000	15%

The employee main rate was cut from 12% to 10% in January 2024 and to 8% in April 2024. The thresholds are frozen, so NI, like income tax, takes a growing share of pay as wages rise.

Worked example: £35,000 a year

Earnings above the £12,570 primary threshold are £22,430. All of that is below the £50,270 upper earnings limit, so NI is 8% of it: £1,794 a year or £150 a month. The employer pays a further £4,500, 15% of pay above £5,000.

What do people get wrong about NI?

Expecting NI to fall when a pension is deducted. Only salary sacrifice reduces NI. Standard workplace pension deductions do not.
Assuming NI is annual. It is calculated per pay period, so a bonus month can attract 8% NI on money that would only attract 2% if it had been spread across the year.
Missing NI credits. Years spent caring for children or claiming certain benefits can count towards the State Pension even without contributions.

See the combined effect with income tax in the take-home pay calculator.

Frequently asked questions

Why do I pay NI when I earn under the personal allowance?

You do not, on annual earnings. The NI primary threshold is £12,570, the same as the personal allowance. But NI is worked out per pay period, so a single month over £1,048 attracts NI even if your yearly total is below the threshold.

Does National Insurance count towards my State Pension?

Yes. Each tax year in which you earn above the lower earnings limit counts as a qualifying year, and you need 35 qualifying years for the full new State Pension. You get credit for earnings between the lower earnings limit and the primary threshold even though you pay nothing.

Is employer NI taken from my pay?

No. Employer NI is paid by your employer on top of your salary and never appears as a deduction on your payslip. It rose to 15% above £5,000 from April 2025, which is why salary sacrifice pensions became more attractive to employers.