Most people know they pay income tax. Fewer people know exactly how much National Insurance they pay — or what they're getting for it. It's on every payslip, it's significant, and it's worth understanding properly.
The 2025/26 employee NI rates
- £0 – £12,570 — No NI (below Primary Threshold)
- £12,571 – £50,270 — 8% NI
- Above £50,270 — 2% NI
On a £40,000 salary, that's: 8% on £27,430 (£40,000 minus £12,570) = £2,194 per year in NI, or about £183 per month.
On a £60,000 salary: 8% on £37,700 + 2% on £9,730 = £3,016 + £195 = £3,211 per year.
How NI compares to income tax
NI and income tax have the same lower threshold (£12,570) but different upper limits. Income tax jumps to 40% at £50,270. NI drops to 2% at the same point. The combined marginal rate on income between £12,570 and £50,270 is 20% + 8% = 28%. Above £50,270 it's 40% + 2% = 42%.
This is why a pay rise from £49,000 to £55,000 doesn't feel as generous as it sounds — 42% of every extra pound above £50,270 goes to HMRC.
What NI actually pays for
National Insurance contributions build entitlement to the State Pension and other benefits including Jobseeker's Allowance, Employment and Support Allowance, and Maternity Allowance. You need 35 qualifying years to get the full new State Pension — currently £221.20 per week in 2025/26.
Even if you earn between £6,396 and £12,570 — below the threshold where you actually pay contributions — those years still count as qualifying years. You're building your pension record without making any payment.
What happens when you reach State Pension age
Once you reach State Pension age (currently 66), you stop paying employee National Insurance — even if you keep working. That's a significant boost to your take-home pay if you work past 66.
Self-employed NI rates
Self-employed people pay Class 4 NI instead of Class 1: 6% on profits between £12,570 and £50,270, and 2% above. That's lower than employee rates — but employees also benefit from employer contributions (15% on wages above £5,000) that fund the same entitlements.
Check your take-home
The salary calculator calculates both income tax and National Insurance together, showing you the exact split and your real take-home figure. Enter your salary to see both deductions side by side.