Published: July 2026 | Fact-Checked & Audited By: David Vance, CTA FCA (Chartered Tax Advisor & Accountant)
This guide is fully updated for the 2026/27 UK tax year. All income tax rates, National Insurance thresholds, and payroll parameters are audited against official HMRC figures.
National Insurance (NI) is a separate tax on earnings in the UK, designed to fund state benefits, the National Health Service (NHS), and the State Pension. Unlike Income Tax, which is calculated cumulatively across the entire tax year, National Insurance is calculated on a non-cumulative basis for each pay period. In this comprehensive guide, we explain employee Class 1 NI rates, employer Class 1 NI rates, and the primary thresholds for the 2026/27 tax year.
Class 1 Employee National Insurance Rates (2026/27)
Employees pay Class 1 National Insurance on their gross earnings. The rates are split into two primary thresholds:
- The Primary Threshold (PT): Earnings up to £242 per week (£1,047 per month) are tax-free (0% NI).
- Basic Rate NI: Earnings between the Primary Threshold and the Upper Earnings Limit (UEL) of £967 per week (£4,189 per month) are taxed at 8%.
- Higher Rate NI: Any earnings exceeding the UEL (£4,189 per month) are taxed at a reduced rate of 2%.
Class 1 Employer National Insurance Rates
Employers are also liable for National Insurance on their employees’ salaries. Employer contributions do not reduce the employee’s take-home pay, but represent a substantial cost for businesses:
- The Secondary Threshold (ST): Employers pay 0% NI on employee earnings up to £175 per week (£758 per month).
- Standard Employer Rate: For any employee earnings above £758 per month, the employer pays a flat rate of 13.8%.
- Employment Allowance: Eligible small businesses can claim the **Employment Allowance** to offset their employer NI bills by up to £5,000 per year.
Step-by-Step Employee NI Calculation Example
Let’s calculate the monthly Class 1 Employee NI deduction for an individual earning a gross salary of £5,000 per month in 2026/27:
- Identify Thresholds: The Primary Threshold is £1,047.50/month. The Upper Earnings Limit is £4,189.00/month.
- Calculate 8% Band: Earnings between £1,047.50 and £4,189.00 = £3,141.50.n – NI due in this band = £3,141.50 * 8% = £251.32.
- Calculate 2% Band: Earnings above £4,189.00 = £5,000.00 – £4,189.00 = £811.00.n – NI due in this band = £811.00 * 2% = £16.22.
- Total Employee NI Due: £251.32 + £16.22 = £267.54 per month.
David Vance, CTA FCA, recommends: “Unlike Income Tax, which pool all your earnings cumulatively, National Insurance is calculated completely independently per job. If you work two jobs earning £1,000 per month each, you will pay £0 in Employee National Insurance, because both incomes fall below the £1,047 monthly threshold. In contrast, earning £2,000 from a single job would trigger a substantial NI deduction.”
Topical Cluster Links
To run payroll calculations or check tax rates, refer to our other pages:
- Use our Salary Take-Home Pay Calculator to calculate your NI deductions.
- Read our guide on UK Income Tax Bands & Allowances: The Complete Guide.
- Read our guide on How is PAYE Tax Calculated? Cumulative Tax Codes.
Frequently Asked Questions (FAQs)
1. Do I pay National Insurance after State Pension age?
No. Employees stop paying Class 1 National Insurance once they reach statutory State Pension age, even if they remain in active employment.
2. What is Class 4 National Insurance?
Class 4 National Insurance is paid by self-employed sole traders on their net business profits, charged at 6% between £12,570 and £50,000, and 2% above that.
3. Can I pay voluntary contributions if I have gaps in my NI record?
Yes, you can make voluntary Class 3 contributions to fill gaps in your record to ensure you qualify for the full UK State Pension (which requires 35 qualifying years).