National Insurance explained

National Insurance (NI) is a tax on earnings that also builds your entitlement to the State Pension and some other benefits. For 2026/27 most employees pay nothing on the first £12,570 a year, 8% on earnings from £12,570 to £50,270 and 2% on anything above. Employers pay a separate 15% on earnings above £5,000. Unlike income tax, NI is worked out afresh on each payday, so a big month costs more NI than the same money spread out.

Employee thresholds and rates for 2026/27

Payroll applies these in each pay period, using the weekly or monthly figure.

Threshold	Weekly	Monthly	Annual
Lower Earnings Limit	£129	£559	£6,708
Primary Threshold	£242	£1,048	£12,570
Upper Earnings Limit	£967	£4,189	£50,270

For a standard employee (category A):

• below the Primary Threshold, you pay nothing
• between the Primary Threshold and the Upper Earnings Limit, you pay 8%
• above the Upper Earnings Limit, you pay 2%.

The Primary Threshold is tied to the income tax Personal Allowance, and both are frozen until 5 April 2031. Married women and widows who kept the old reduced-rate election pay 1.85% (category B). People over State Pension age pay nothing (category C). The letters are explained in National Insurance category letters.

What it costs on a public sector salary

Say you are on £32,073, the entry point of NHS band 5 in England, paid monthly and evenly.

• Earnings above £12,570: £19,503.
• NI at 8%: £1,560.24 a year, about £130 a month.

On £56,515, the top of band 7:

• 8% on £37,700 (from £12,570 to £50,270) = £3,016.
• 2% on £6,245 (above £50,270) = £124.90.
• Total: £3,140.90 a year.

Those figures assume the same pay each month. A large back-dated pay award or a month of heavy overtime can push more of that month’s pay above the monthly Upper Earnings Limit of £4,189, where only 2% applies. After a low month, more can fall into the 8% slice. Each period stands alone, so the year’s total can differ slightly from the annual calculation.

The Lower Earnings Limit

Earn at least £129 a week (£6,708 a year) but less than £242 a week and you pay no NI, yet you still get a qualifying credit towards your State Pension for that week. Part-time staff such as lunchtime supervisors or school crossing patrols on short hours can land in this range. Earnings below £129 a week give no credit from that job, though credits can come another way, for example through a Child Benefit claim for a young child or through Carer’s Allowance.

The Lower Earnings Limit still matters for some family payments such as Statutory Maternity Pay. From 6 April 2026 it no longer affects Statutory Sick Pay, which is now paid from the first day of sickness regardless of earnings.

Two jobs, two sets of thresholds

NI is charged per job, and each employer applies the full Primary Threshold separately. With two jobs paying £10,000 each, neither reaches £12,570, so you pay no employee NI at all, even though your income tax is worked out on the combined £20,000.

That holds only for genuinely separate employers. Two contracts with the same employer (a substantive post and bank work at the same NHS trust, for example) are often added together for NI. Tax when you have two jobs goes into this.

What NI pays for

Your NI record decides your State Pension. The full new State Pension is £241.30 a week in 2026/27. You need a minimum number of qualifying years to get anything, and more years for the full amount; gov.uk sets out the current numbers. Your HMRC personal tax account shows your record and a forecast. Gaps can sometimes be filled with voluntary contributions, and the State Pension guide explains how.

NI also counts towards contribution-based Jobseeker’s Allowance and Employment and Support Allowance and, for some, Maternity Allowance and bereavement support.

Employer NI

Employers pay 15% on each employee’s earnings above the Secondary Threshold of £5,000 a year (£96 a week, £417 a month). On the £32,073 salary above, that comes to about £4,061 a year. It does not come out of your pay, but it adds to what a job costs the employer.

For employees under 21, apprentices under 25 and qualifying veterans, the employer pays 0% up to £50,270. Employer National Insurance covers the employer side, including the Employment Allowance.

Self-employed NI

Freelance or locum work done on a self-employed basis has NI collected through Self Assessment rather than payroll:

• Class 4: 6% on profits from £12,570 to £50,270, and 2% above.
• Class 2: no longer compulsory. If your profits are below the Small Profits Threshold of £7,105, you can pay voluntarily at £3.65 a week to protect your State Pension record.

Most public sector bank and agency work goes through PAYE, so this applies only if you are genuinely self-employed.

Salary sacrifice and pensions

Workplace pensions in the public sector (NHS, teachers’, local government and Civil Service) normally use a net pay arrangement. Your contribution reduces the pay that income tax is charged on, but NI is still charged on the full amount. Salary sacrifice schemes, such as cycle to work or some car schemes, reduce your contractual pay, so they lower NI as well as tax. Salary sacrifice schemes explains the trade-offs, and the take-home pay calculator shows the NI line for any salary.