A tax on earnings that funds the state pension, NHS, and benefits. Employees pay 8% on earnings between £12,570-£50,270 and 2% above. Employer NI is 15%.
How National Insurance Reduces Your Pay
National Insurance (NI) is a separate deduction from income tax that funds the State Pension, NHS, and other benefits. As an employee, you pay Class 1 NI at 8% on earnings between £12,570 and £50,270, and 2% on earnings above £50,270.
Unlike income tax, NI has no personal allowance taper and no higher rates beyond 2%. On a £50,000 salary, you pay approximately £2,994 in NI annually. Your employer also pays NI on your behalf (currently 13.8% above £9,100), which is why the total cost of employing you is higher than your gross salary.
Paying NI builds your entitlement to the State Pension. You need 35 qualifying years for the full State Pension. Check your NI record at GOV.UK.
How National Insurance Works in Practice
National Insurance (NI) contributions are mandatory payments that fund the State Pension, NHS, and certain benefits. Employees pay Class 1 NI at 8% on earnings between £12,570 and £50,270 per year, and 2% on earnings above £50,270. Your employer also pays NI on your behalf (13.8% on earnings above £9,100).
Practical Tips
NI is deducted automatically through PAYE alongside income tax. Unlike income tax, there is no personal allowance for NI — it is calculated on a different threshold. You need 35 qualifying years of NI contributions to receive the full State Pension (currently £11,502/year). Check your NI record at gov.uk to see how many qualifying years you have. See qualifying years explained.
Related Topics
National Insurance affects your take home pay significantly. On a £30,000 salary, NI costs approximately £1,394/year. Self-employed workers pay Class 2 and Class 4 NI at different rates. See Class 2 NI and Class 4 NI for details.
See how this affects your take home pay
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