What is National Insurance?
National Insurance (NI) is a second tax on earnings that funds contributory benefits including the state pension — employees pay 8% between £12,570 and £50,270 and 2% above; employers pay 15% on top.
How National Insurance works in 2026/27
Employees pay Class 1 NI of 8% on earnings between £12,570 and £50,270 a year, then 2% above. Employers separately pay 15% on almost everything above £5,000 per employee — a cost workers never see on a payslip but which economists say largely comes out of wages. Self-employed people pay Class 4 at 6% and 2% on profits; the old flat-rate Class 2 has been abolished as a compulsory charge. Unlike income tax, NI applies only to earnings — pensions, rent and savings income escape it, and pensioners who keep working pay none at all.
What you get for it
NI is nominally contributory: paying it (or receiving credits, e.g. for child benefit or caring) builds qualifying years, and you need 35 of them for the full new state pension. In reality there is no personal pot — today's NI pays today's pensions, which is why economists describe it as a second income tax with a different name and narrower base.
Why it matters now
Because NI's odd shape — heavy on workers, absent on wealth — makes it a favourite lever: the Greens would charge the full 8% above £50,270 (instead of 2%), costing a £70,000 earner about £1,184 a year; the Conservatives' First Job Bonus would redirect a young worker's first £5,000 of NI into a house-deposit fund; and the 2025 rise in employer NI to 15% remains one of the biggest revenue-raisers of this Parliament. Work out your own bill with the National Insurance calculator.
Plain-English guide for general information only — not financial, legal or tax advice. Rates are 2026/27 unless stated. Last reviewed 5 July 2026.
Frequently asked questions
How much National Insurance do I pay in 2026/27?
Employees pay 8% on earnings between £12,570 and £50,270, then 2% above. On £35,000 that's about £1,794 a year. The self-employed pay 6% and 2% on profits. Your employer separately pays 15% above £5,000.
Do pensioners pay National Insurance?
No — NI is only charged on earnings below state pension age. A working pensioner keeps 8% more of their salary than a younger colleague on the same pay, one reason economists call for merging NI with income tax.
How many years of NI do I need for a full state pension?
35 qualifying years for the full new state pension (about 10 years minimum to get anything). Years can come from work, or free credits for raising children, caring or claiming certain benefits — check your NI record on gov.uk.