Seeing National Insurance contributions (NICs) deducted from your payslip can feel a little deflating. But when you understand what National Insurance (NI) actually does—for you and for wider society—it can change how you feel about that monthly payroll deduction. NI supports your future State Pension and a range of vital public services that most of us rely on at some point.
And right now, it matters more than ever to understand the detail. Employer NI contributions rose to 15% in April 2025, and the Secondary Threshold dropped to £5,000 a year—meaning more employers are paying more, on more of what they pay their people. Getting to grips with how NI works helps you avoid overpaying, spot gaps before they become a problem, and make smarter decisions about your pay.
What is National Insurance?
National Insurance is a system of mandatory contributions paid by employees and employers in the UK to fund state benefits, including the State Pension, unemployment benefits, the National Health Service (NHS), and other social security programmes.
How much you pay depends on your employment status and earnings, with different classes in place for employees, employers, and the self-employed.
It’s worth noting that NI is different from Income Tax. While both are deducted from your pay automatically, Income Tax is based on a wider range of income sources and works on a progressive rate system—the more you earn, the more you pay. NI works differently, with set thresholds and rates depending on your class and category.
You can find out about how this impacts you in our Income Tax Rate and Personal Allowances guide.
What is a National Insurance number?
Everyone has a unique National Insurance number that matches their name against their NI contributions and tax record. A sequence of two letters, six numbers, and a final letter, you receive your NI number when you reach 16 or when you have a right to work in the UK—this will remain the same for life.
Think of it as your personal identification code. You’ll need it when you start a new job, apply for a student loan, or claim certain benefits.
How to find your National Insurance number?
You can find your NI number on your payslips, P60, or from any letters you’ve received from HMRC. You can also find your National Insurance number online.
Who pays National Insurance?
You need to pay National Insurance if you’re 16 or older and either:
- An employee earning more than £242 per week from a single job.
- Self-employed and making a profit of more than £12,570 a year.
When do you stop making National Insurance contributions?
The answer depends on whether you’re employed or self-employed:
- If you’re employed: even if you’re still working, you can choose to stop paying Class 1 National Insurance when you reach the State Pension age.
- If you’re self-employed: you stop paying Class 4 National Insurance from 6 April (the start of the tax year) after you reach the State Pension age.
What do National Insurance contributions pay for?
Your NI contributions help fund a range of state benefits and public services. It’s easy to think of NI as just another deduction, but the list of what it supports is broader than most people realise:
- State Pension: provides financial support when you retire. You will need 35 years of contributions or credits to qualify for the new State Pension.
- NHS: helps fund healthcare services, including hospitals, GPs, treatments, and community health programs.
- Maternity allowance: support for those who don’t qualify for statutory maternity pay.
- Jobseeker’s Allowance (JSA): helps to support those looking for work.
- Employment and support allowance (ESA): financial help for those unable to work due to illness or disability.
- Bereavement support payment: helps spouses or civil partners after the death of a loved one.
Who’s exempt from National Insurance?
If you’re an employee earning between £129 and £242 a week, you don’t need to pay NI. For self-employed people, the exemption applies if your annual profits fall below the Class 4 lower profits limit—check the latest HMRC guidance to confirm the current threshold for 2026/27, as this can change each tax year.
That said, you can choose to pay some voluntarily, and you may still qualify for certain benefits and the State Pension even if you’re exempt. It’s worth checking your entitlements before assuming exemption means you’re missing out.
What are gaps in your National Insurance record?
You may have gaps in your record if you don’t pay National Insurance or don’t get National Insurance credits.
This might happen if you were:
- employed but had low earnings.
- unemployed and weren’t claiming benefit.
- self-employed but didn’t pay National Insurance contributions because of small profits.
- living or working outside the UK.
You can check your National Insurance record online.
What will happen if you have gaps in your National Insurance record?
- You might not have enough qualifying years for the full State Pension.
- You could miss out on some benefits available to you.
You can view your State Pension forecast to work out how this affects your future retirement income.
But don’t worry–if you’re eligible, you may be able to make voluntary National Insurance contributions to cover those gaps!
Look at the scenarios below to work out if voluntary contributions would benefit you:
| Scenario | Should you consider voluntary contributions? |
|---|---|
| Low earnings in a year | Yes, if it created a gap in your NI record. |
| Lived/worked abroad | If you received no UK credits, you could benefit. |
| Approaching retirement | Yes, if you have under 35 qualifying years. |
| On benefits with NI credits | Not necessary if you receive full credits. |
| Already have 35+ years experience | No, unless planning early retirement. |
How to check your National Insurance contributions
You can check your National Insurance record online to:
- See what you’ve paid up until the start of the current tax year.
- Find out if you’ve received any National Insurance credits.
- Check if any gaps in National Insurance contributions or credits mean some years won’t count towards your State Pension.
- Work out if paying voluntary contributions will help fill any gaps.
- See how your State Pension forecast will change if you pay voluntary National Insurance contributions.
- Find out if you can pay voluntary contributions online and how much it will cost.
The types of National Insurance classes
There are several NI classes, and each one is based on your employment status—essentially, who’s responsible for paying your contributions. Each class also determines which thresholds apply to you.
The classes are:
| National Insurance class | Who should pay National Insurance contributions |
|---|---|
| Class 1 National Insurance | Employees earning more than £242 a week and under State Pension age. Employers also pay on earnings above the Secondary Threshold (£96 per week / £5,000 per year). |
| Class 1A or 1B National Insurance | Paid by employers on employees' expenses or benefits, such as company cars or private medical insurance. |
| Class 2 National Insurance | Self-employed people earning profits over £12,570 a year (since April 2024, it’s no longer mandatory but can be paid voluntarily). |
| Class 3 Voluntary Contributions | Individuals who want to fill gaps in their National Insurance record (see above). |
| Class 4 National Insurance | Self-employed individuals with profits of £12,570 or more a year. |
What are National Insurance category letters?
NI category letters determine how much you pay in contributions based on your earnings and employment situation. Your employer uses these to make sure the right deductions are applied through PAYE (Pay As You Earn).
Here’s a breakdown of each category:
| Category letter | Employee group |
|---|---|
| A | All employees apart from those in groups B, C, H, J, M, V and Z in this table. |
| B | Married women and widows who have a certificate of election form showing they’re entitled to pay reduced National Insurance. |
| C | Employees over the State Pension age. |
| H | Apprentices under 25. |
| J | Employees who can defer National Insurance because they’re already paying it in another job. |
| M | Employees under 21. |
| V | Employees who are working in their first job since leaving the armed forces (veterans). |
| X | Employees who don’t have to pay NI, for example, because they’re under 16. |
| Z | Employees under 21 who can defer National Insurance because they’re already paying it in another job. |
Category letters for eligible employees who work in freeports
Freeports are government-designated areas with specialised tax and customs rules. Employees who work in them fall under different category letters:
| Category letter | Employee group |
|---|---|
| F | All employees who work in freeports, apart from those in groups I, L, and S in this table. |
| I | Married women and widows working in freeports who have a certificate of election form showing they’re entitled to pay reduced National Insurance. |
| L | Employees who work in freeports and can defer National Insurance because they’re already paying it in another job. |
| S | Employees who work in freeports and are over the State Pension age. |
And for investment zones
| N | Standard category letter |
| E | Married women and widows entitled to pay reduced NICs |
| K | Employees over the state pension age |
| D | Employees who can defer paying 12% NICs and pay only 2% because they are already paying it in another job |
National Insurance thresholds
Alongside NI categories, you and your employer pay Class 1 National Insurance depending on how much you earn.
The table below shows employer rates by category letter. To help make sense of the column headers, here’s a quick key:
- ST: Secondary Threshold (£96/week; £5,000/year)
- LEL: Lower Earnings Limit (£129/week; £6,708/year)
- FUST: Freeport Upper Secondary Threshold (£481/week; £25,000/year)
- IVUST: Investment Zone Upper Secondary Threshold (£481/week; £25,000/year)
- UEL: Upper Earnings Limit (£967/week; £50,270/year)
- UST/AUST/VUST: Upper Secondary Thresholds for under 21s, apprentices, and veterans (all £967/week; £50,270/year)
For the 2026/27 tax year, the thresholds are:
| Thresholds | Weekly | Monthly | Annual |
|---|---|---|---|
| Lower Earnings Limit (LEL) | £129 | £559 | £6,708 |
| Primary Threshold (PT) | £242 | £1,048 | £12,570 |
| Secondary Threshold (ST) | £96 | £417 | £5,000 |
| Upper Secondary Threshold, Under 21 (UST) | £967 | £4,189 | £50,270 |
| Upper Earnings Limit (UEL) | £967 | £4,189 | £50,270 |
| Apprentice Upper Secondary Threshold (AUST) | £967 | £4,189 | £50,270 |
| Veterans Upper Secondary Threshold (VUST) | £967 | £4,189 | £50,270 |
| Freeport Upper Secondary Threshold (FUST) | £481 | £2,083 | £25,000 |
| Investment Zone Upper Secondary Threshold (IVUST) | £481 | £2,083 | £25,000 |
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Categories and National Insurance contributions
Your employer deducts National Insurance from your pay through PAYE (Pay As You Earn), based on specific rates assigned to different categories and thresholds. These are known as primary contributions.
Here are the rates for 2026/27:
| Category letter | £125 to £242 (£542 to £1,048 a month) | £242.01 to £967 (£1,048.01 to £4,189 a month) | Over £967 a week (£4,189 a month) |
|---|---|---|---|
| A, F, H, M, N, V | 0% | 8% | 2% |
| B, E, I | 0% | 1.85% | 2% |
| D, J, L, Z | 0% | 2% | 2% |
| C, K, S | nil | nil | nil |
For example
If you’re a category A person who earns £1,000 in a week you can expect to pay:
- Nothing on the first £242
- 8% on earnings between £242.01 and £967
- 2% on the remaining earnings above £967
What about employers' National Insurance contributions?
Employer NI contributions are what your employer pays to HMRC on top of your salary—they’re separate from the NI that’s deducted from your pay.
Here are the employer contributions rates for 2026/27:
| Category letter | ST to LEL | LEL to UEL/UT/AUST | FUST to UEL/UST/AUST/VUST | Above UEL/UST/AUST/VUST |
|---|---|---|---|---|
| A, B, C, J | 15% | 15% | 15% | 15% |
| H, M, V, Z | 0% | 0% | 0% | 15% |
| D, E, F, I, K, L, N, S | 0% | 0% | 15% | 15% |
Still confused about National Insurance contributions?
That’s completely understandable—NI has a lot of moving parts. The good news is you don’t have to work it all out on your own.
At Cintra, we’ve built smart, compliant payroll solutions to help take the complexity off your plate.
Book a demo—and let us take the NI-ghtmare out of NI.
Payroll Legislation Guide
The facts, figures, thresholds and allowances for 2026/27 spanning tax, National Insurance, pensions, statutory payments and more.
Salary sacrifice is a formal agreement between you and your employer to reduce your gross annual salary in exchange for non-cash benefits such as:
- Additional annual leave
- Pension contributions
- Cycle-to-work scheme
- Childcare vouchers
As a salary sacrifice is deducted before tax and NI calculations, it reduces your gross income. This means that you (and your employer) will pay less National Insurance as your taxable income is lower.
For example
If an employee sacrifices £100/month for a pension:
That £100 is not subject to NI, saving the employee 8% and the employer 15% in NI contributions on that amount.
While they can be an effective way to save on NI contributions, salary sacrifice might not be the right route for everyone.
By agreeing to a salary sacrifice, your official salary will be lower—this can impact any state benefits you are entitled to like statutory maternity pay or the state pension. It also might influence things like mortgage entitlement or level of life insurance.
It’s important to weigh out the pros and cons of salary sacrifices, as while you boost your take-home pay and maximise NI contributions, the downsides may outweigh the savings.
Employees stop paying Class 1 National Insurance when they reach State Pension age (currently 66). Self-employed individuals stop paying Class 4 National Insurance from 6 April of the tax year after they reach State Pension age.
