What is National Insurance?
A UK tax on earnings and self-employed profits that funds the state pension, NHS, and benefits.
Key Facts
- ✓ Employees pay Class 1: 8% (£12,570-£50,270) + 2% above
- ✓ Employers pay 15% above £5,000
- ✓ Self-employed pay Class 2 (flat rate) and Class 4 (profit-based)
- ✓ 35 qualifying years needed for full state pension
- ✓ No NI payable after state pension age
Current Rates (2025/26)
- ▸ Employee: 8% between £12,570-£50,270, 2% above £50,270
- ▸ Employer: 15% above £5,000
- ▸ Class 2: £3.45/week
- ▸ Class 4: 6% on £12,570-£50,270, 2% above
Explanation
National Insurance (NI) is a system of contributions paid by employees, employers, and the self-employed in the UK. It funds the state pension, NHS, and other social security benefits. There are several classes of NI: Class 1 is paid by employees (8% on earnings between the Primary Threshold and Upper Earnings Limit, 2% above that) and employers (15% above the Secondary Threshold). Class 2 is a flat-rate contribution for the self-employed. Class 4 is a profit-based contribution for the self-employed. Class 3 is voluntary, allowing you to fill gaps in your NI record. You need 35 qualifying years of NI contributions to receive the full new state pension. Your NI contributions are tracked by HMRC and you can check your record online.
Try the calculator: Use our free calculator to see how national insurance affects your finances.
National Insurance Calculator →Other Glossary Terms
The system HMRC uses to collect income tax and National Insurance directly from employee wages.
Personal AllowanceThe amount of income you can earn each year before paying income tax — currently £12,570.
Basic Rate (20%)The 20% income tax rate applied to taxable income between £12,571 and £50,270.
Higher Rate (40%)The 40% income tax rate applied to taxable income between £50,271 and £125,140.
Additional Rate (45%)The 45% income tax rate applied to taxable income above £125,140.
Stamp Duty Land Tax (SDLT)A tax paid when buying property or land in England and Northern Ireland.
Frequently Asked Questions
What does national insurance mean?
A UK tax on earnings and self-employed profits that funds the state pension, NHS, and benefits.
Why does national insurance matter?
Understanding national insurance helps you make informed financial decisions and ensure you pay the correct amount of tax. Getting it wrong could mean overpaying or underpaying HMRC, which may result in penalties or missed savings. Use our calculators to see how national insurance applies to your personal situation.
Where can I find more information about national insurance?
HMRC publishes official guidance on GOV.UK for all UK tax topics. For a quick overview, our glossary entries are written in plain English and updated each tax year. You can also use our free online calculators to model different scenarios and understand how changes to your income, deductions, or allowances affect your overall tax position.