National Insurance (NI) is a tax on earnings and self-employed profits that funds the state pension and other benefits. It is separate from income tax and is calculated differently. This guide explains how NI works for employees in the 2026/27 tax year.
Class 1 employee NI rates 2026/27
Most employees pay Class 1 National Insurance. The amount you pay depends on your weekly or monthly earnings. For 2026/27:
| Annual Earnings | Monthly Earnings | NI Rate |
|---|---|---|
| Up to £12,576 | Up to £1,048 | 0% |
| £12,577–£50,268 | £1,049–£4,189 | 8% |
| Over £50,268 | Over £4,189 | 2% |
How NI is calculated
Unlike income tax, which is calculated annually, National Insurance is assessed on a pay-period basis — usually monthly or weekly. This means a bonus paid in one month can attract more NI than if the same amount were spread across the year, because each month's earnings are assessed against monthly thresholds independently.
Our income tax calculator annualises the monthly NI calculation to give you an accurate annual figure. The bonus tax calculator handles the month-specific NI assessment for one-off payments.
NI categories
Different employees have different NI categories that determine which rate table applies:
- Category A — standard employees (the most common)
- Category B — married women or widows entitled to pay a reduced rate
- Category C — employees over state pension age (no employee NI)
- Category H — apprentices under 25
- Category M — employees under 21
- Category S — employees working in freeports
Your NI category is shown on your payslip. Most employees are category A. Our calculator defaults to category A but lets you select others.
What does NI pay for?
National Insurance contributions go towards the State Pension, the National Health Service, unemployment benefit (Universal Credit), Statutory Maternity, Paternity, and Sick Pay entitlements, and bereavement benefits. You need 35 qualifying years of NI contributions to receive the full new State Pension (£221.20/week for 2024/25).
Is NI affected by Scottish income tax?
No. National Insurance is a UK-wide tax and is not devolved to the Scottish Parliament. Scottish residents pay exactly the same NI rates as English, Welsh, or Northern Irish residents. See our Scottish income tax guide for more detail on what is and is not devolved.