National Insurance: Rates, Thresholds and What You Need to Know

Tax Queen

Tax Expert @ Pie

3 min read

Let’s Keep It Simple

National Insurance is part of the UK social security system and helps build entitlement to certain contributory benefits and the State Pension. Employees and employers can pay Class 1 National Insurance, while Class 1A and Class 1B contributions apply to employers in specific circumstances involving benefits and expenses.

Self-employed people may pay Class 2 and Class 4 National Insurance depending on their profits and circumstances. Understanding which class applies to you is important because the thresholds and rates are different.

For 2026/27, the figures have changed in some areas compared with previous tax years, so using older National Insurance figures can give you the wrong result. HMRC's current rates confirm the thresholds and contribution rates for the year.

What's Changing with National Insurance Contributions in 2026/27?

The 2026/27 tax year began on 6 April 2026, bringing updated National Insurance thresholds and rates.

For most employees, the main Class 1 employee rates remain 8% on earnings above the Primary Threshold up to the Upper Earnings Limit, followed by 2% on earnings above the Upper Earnings Limit.

For employers, the standard secondary Class 1 rate remains 15%, with employer contributions generally beginning above the Secondary Threshold of £96 per week or £5,000 per year.

The Lower Earnings Limit has increased to £129 per week for 2026/27, compared with £125 in 2025/26. This is important because employees earning at least the Lower Earnings Limit can generally build entitlement to certain benefits and the State Pension without actually paying employee National Insurance at that level.

What Exactly Are the Upper Earnings Limit and National Insurance Thresholds for 2026/27?

National Insurance thresholds are the earnings or profit levels used to determine when contributions become payable and which rate applies.

For employees, the Lower Earnings Limit is £129 per week, equivalent to £6,708 per year. Employees do not normally pay National Insurance at this level, but the earnings can still help protect their National Insurance record.

The Primary Threshold is £242 per week, or £12,570 per year. This is the point at which most employees start paying Class 1 National Insurance.

The Upper Earnings Limit is £967 per week, equivalent to £50,270 per year. Earnings above this level are generally subject to the lower employee National Insurance rate of 2%.

For employers, the Secondary Threshold is £96 per week, £417 per month or £5,000 per year. Employers generally pay secondary Class 1 National Insurance at 15% on earnings above this threshold.

Different thresholds can apply to specific categories of workers, including employees under 21, apprentices under 25, veterans and employees in Freeport or Investment Zone arrangements.

Income Tax Rates and Thresholds

Income Tax and National Insurance are separate charges, although both can affect your take-home pay.

For 2026/27, the standard Personal Allowance remains £12,570. In England, Wales and Northern Ireland, the basic rate of Income Tax is 20%, the higher rate is 40%, and the additional rate is 45%.

The Personal Allowance normally starts to taper once adjusted net income exceeds £100,000, reaching zero at £125,140.

Income Tax bands differ in Scotland, so Scottish taxpayers should use the Scottish Income Tax rates applicable to their circumstances. National Insurance rates are separate from those Scottish Income Tax bands.

How Will the 2026/27 NI Thresholds Affect Your Pay Packet?

If you earn below £242 per week from one job, you will not normally pay employee Class 1 National Insurance. However, if you earn at least £129 per week, those earnings can still help protect your National Insurance record.

For earnings between £242 and £967 per week, most employees pay 8% Class 1 National Insurance on that portion of earnings.

Earnings above £967 per week are generally subject to the lower employee rate of 2%.

Your actual deduction can vary if you have a different National Insurance category letter, more than one job, or another circumstance that affects how your contributions are calculated.

What If You're Self-employed? How Do the 2026/27 Thresholds Affect You?

Self-employed National Insurance works differently from employee Class 1 contributions.

For 2026/27, the Small Profits Threshold is £7,105 a year. If your profits are below this amount, you do not normally have to pay Class 2 National Insurance, although you can choose to pay voluntary Class 2 contributions at £3.65 per week to help protect your National Insurance record.

If your profits are £7,105 or more, Class 2 contributions are treated as having been paid for National Insurance record purposes, so you do not normally make an actual Class 2 payment.

Class 4 National Insurance becomes payable when profits exceed £12,570.

For 2026/27, Class 4 National Insurance is charged at 6% on profits above £12,570 up to £50,270. Profits above £50,270 are subject to Class 4 National Insurance at 2%.

Most self-employed people pay their Class 2 and Class 4 National Insurance through Self Assessment.

National Insurance Refund: Can You Get Money Back If You've Overpaid?

If you think you have paid too much National Insurance, you may be able to claim a National Insurance refund, depending on why the contributions were overpaid.

For example, HMRC has a refund process for certain cases involving overpaid National Insurance contributions or contributions paid in error by an employer. In some cases, HMRC will write to you if its records indicate that you may be due a refund. You may need the claim reference from that letter to use the relevant refund service.

If you believe you have overpaid National Insurance through your employment, it can also be important to check with your employer first, as payroll corrections may need to be made before a refund is claimed from HMRC.

Voluntary Class 2 and Class 3 National Insurance contributions have their own refund rules. A refund can affect your National Insurance record or entitlement to benefits, including the State Pension, so it is important to understand the consequences before requesting one.

Keeping accurate records of your earnings and National Insurance deductions can make it easier to identify potential overpayments and understand whether you may have grounds for a National Insurance refund.

Do Employers Need to Do Anything About the 2026/27 NI Changes and Employment Allowance?

Employers should make sure their payroll systems are using the correct 2026/27 thresholds and National Insurance rates.

The employer Secondary Threshold is £96 per week, equivalent to £5,000 per year. The standard employer Class 1 National Insurance rate is 15% above the relevant threshold.

This means employers need to account for both the threshold and the contribution rate when calculating the cost of employing staff.

Different employer thresholds can apply to specific groups, including employees under 21, apprentices under 25, veterans and certain workers in Freeports and Investment Zones.

Payroll software will generally incorporate the latest statutory rates, but employers remain responsible for making sure their payroll calculations and PAYE submissions are correct.

Employment Allowance: What Employers Need to Know

The Employment Allowance allows eligible employers to reduce their annual employer Class 1 National Insurance liability by up to £10,500.

For 2026/27, eligible employers can claim up to £10,500 against their employer National Insurance liability. The allowance is applied through payroll and reduces the amount of employer Class 1 National Insurance that needs to be paid until the allowance is used or the tax year ends.

Eligibility rules apply, so employers should check whether their business qualifies before relying on the allowance.

Are There Special NI Provisions for Certain Groups in 2026/27?

Yes. Different National Insurance rules can apply to certain groups of workers.

Employees under 21 can benefit from a higher employer Upper Secondary Threshold. For 2026/27, the relevant threshold is £967 per week, or £50,270 per year.

Apprentices under 25 can also benefit from the same £967 weekly or £50,270 annual employer threshold.

Qualifying veterans have specific employer National Insurance rules, while separate arrangements apply in Freeports and Investment Zones.

If you are working after reaching State Pension age, you generally stop paying employee Class 1 National Insurance. Self-employed people generally stop paying Class 4 National Insurance from 6 April after reaching State Pension age.

How Do the 2026/27 NI Thresholds Compare to Previous Years?

The 2026/27 thresholds show some changes compared with 2025/26.

The Lower Earnings Limit has increased from £125 to £129 per week.

The Small Profits Threshold for self-employed people has increased from £6,845 to £7,105 a year, while the voluntary Class 2 rate has increased from £3.50 to £3.65 per week.

The Lower Profits Limit for Class 4 remains at £12,570, and the Upper Profits Limit remains at £50,270. The Class 4 rates remain 6% between those limits and 2% above the Upper Profits Limit.

For employers, the Secondary Threshold remains at £5,000 per year and the standard employer Class 1 rate remains 15%.

Final Words: Stay Ahead of the 2026/27 NI Thresholds

The 2026/27 National Insurance thresholds affect employees, employers and self-employed workers in different ways. The key figures to remember include the £129 Lower Earnings Limit, the £242 Primary Threshold, the £967 Upper Earnings Limit and the £5,000 employer Secondary Threshold.

For self-employed workers, Class 4 National Insurance remains 6% between £12,570 and £50,270, then 2% above £50,270.

If you think you have paid too much National Insurance, checking your records and understanding the relevant refund rules can help you establish whether you may be entitled to a National Insurance refund.

Keeping your records current throughout the year can make tax planning easier and reduce the risk of relying on outdated figures.

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