National Insurance Complete Guide 2025-26: Class 1, 2, 3, 4 Rates and Thresholds
National Insurance Contributions (NICs) are the UK's second income-based tax, running alongside Income Tax. While Income Tax funds general government spending, NICs notionally fund the State Pension, NHS, and contributory benefits (though in practice, both taxes go into the same pot). For 2025-26, the employee rate is 8% on earnings between £12,570 and £50,270, with 2% above that. Employer NI rose to 15% from April 2025, with the threshold dropping to £5,000. This guide covers every NI class, threshold, and rate for the current tax year.
Class 1: employees
Employee contributions
| Earnings Band | Rate | 2025-26 Thresholds |
|---|---|---|
| Below Primary Threshold | 0% | Up to £12,570/year (£242/week) |
| Primary Threshold to Upper Earnings Limit | 8% | £12,570 to £50,270/year |
| Above Upper Earnings Limit | 2% | Over £50,270/year |
The Lower Earnings Limit (LEL) is £6,396/year (£123/week). Earnings between the LEL and the Primary Threshold attract no NI charge, but they do count as qualifying earnings for State Pension and benefit purposes. This is a free bonus: you build pension credits without paying anything.
Employer contributions (changed April 2025)
| Earnings Band | Rate | 2025-26 Thresholds |
|---|---|---|
| Below Secondary Threshold | 0% | Up to £5,000/year (£96/week) |
| Above Secondary Threshold | 15% | Over £5,000/year |
This is a significant change from 2024-25, when the employer rate was 13.8% with a threshold of £9,100. The combined effect of raising the rate by 1.2 percentage points and lowering the threshold by £4,100 represents a substantial increase in employer costs. For an employee earning £30,000, the employer NI bill rose from approximately £2,884 (2024-25) to £3,750 (2025-26), an increase of £866 per year.
Worked examples: employee NI
£25,000 salary:
- 8% on £12,570 to £25,000 = £993.60
- Total employee NI: £993.60/year, £82.80/month
£50,000 salary:
- 8% on £12,570 to £50,000 = £2,994.40
- Total employee NI: £2,994.40/year, £249.53/month
£80,000 salary:
- 8% on £12,570 to £50,270 = £3,016
- 2% on £50,270 to £80,000 = £594.60
- Total employee NI: £3,610.60/year, £300.88/month
See the complete breakdown for a £50,000 salary, including Income Tax and NI combined.
Class 2: self-employed (flat rate)
Self-employed individuals with profits above £12,570 pay Class 2 NI at a flat rate of £3.50 per week (£182 per year) for 2025-26. This is not calculated as a percentage; it is a fixed charge. Class 2 contributions count as qualifying years for the State Pension.
If your profits are below £12,570, Class 2 is not compulsory, but you can pay it voluntarily. At £182 per year, voluntary Class 2 is one of the cheapest ways to build State Pension entitlement. Each qualifying year adds approximately £6.58 per week (£342/year) to your State Pension for life.
Class 3: voluntary contributions
Class 3 is a voluntary NI contribution for people who are not working (or not earning enough to pay Class 1 or Class 2) and want to fill gaps in their NI record for State Pension purposes. The rate for 2025-26 is £17.75 per week (£923 per year). This is significantly more expensive than Class 2 (£182/year), so if you are self-employed and eligible for Class 2, always pay Class 2 instead.
You can check your NI record and identify gaps through your Personal Tax Account on GOV.UK. HMRC allows you to fill gaps going back up to six years (with some extensions for older gaps). The return on investment for Class 3 contributions is still positive: £923 per year buys roughly £342 per year of pension income for life, so you break even after about 2.7 years of receiving the pension.
Class 4: self-employed (profit-based)
| Profit Band | Rate | 2025-26 Thresholds |
|---|---|---|
| Below Lower Profits Limit | 0% | Up to £12,570 |
| Lower Profits Limit to Upper Profits Limit | 6% | £12,570 to £50,270 |
| Above Upper Profits Limit | 2% | Over £50,270 |
The Class 4 main rate of 6% is a notable reduction from 9% in 2023-24. This was part of a planned two-step cut (9% to 8% in 2024-25, then 8% to 6% in 2025-26). Self-employed workers benefit from a significantly lower NI rate than employees, though Class 4 does not count toward benefit entitlements the way Class 1 does.
Worked example: £45,000 self-employed profit
- Class 2: £182
- Class 4 at 6% on £12,570 to £45,000 (£32,430): £1,945.80
- Total NI: £2,127.80
Compare this with an employee on £45,000 who pays £2,594.40 in Class 1 NI. The self-employed person saves £466.60. Full comparison at £45,000.
Employment Allowance
Small employers can claim the Employment Allowance, which reduces their employer NI bill by up to £10,500 per year (2025-26, increased from £5,000 in 2024-25). This allowance was expanded significantly alongside the increase in employer NI rates, specifically to protect small businesses from the full impact of the rate change.
To qualify, the employer's total employer NI liability in the previous tax year must have been below £100,000. The allowance cannot be claimed by single-director companies with no other employees. It is claimed through the employer's payroll software at the start of the tax year.
For a small business with five employees each earning £25,000, the total employer NI would be 15% x (£25,000 - £5,000) x 5 = £15,000. After the £10,500 Employment Allowance, the actual cost is just £4,500.
NI and the State Pension
You need 35 qualifying years of NI contributions to receive the full new State Pension (£230.25/week in 2025-26, or £11,973/year). Each qualifying year between 10 and 35 adds roughly £6.58/week. With fewer than 10 qualifying years, you receive no State Pension at all.
Class 1 (employee) and Class 2 (self-employed) contributions count as qualifying years. Class 3 (voluntary) contributions also count. Class 4 contributions do not count toward the State Pension. NI credits are available for periods of unemployment (if claiming certain benefits), maternity/paternity leave, and caring for a child under 12.
Check your State Pension projection with our calculator.
NI and other benefits
NI contributions provide entitlement to contributory benefits beyond the State Pension:
- Contribution-based Jobseeker's Allowance: requires NI contributions in the two relevant tax years before the benefit year.
- Contribution-based Employment and Support Allowance (ESA): similar NI requirements to JSA.
- Maternity Allowance: for self-employed women or those not qualifying for Statutory Maternity Pay.
- Bereavement Support Payment: based on the deceased partner's NI record.
These benefits are distinct from means-tested benefits like Universal Credit, which do not require NI contributions.
Frequently asked questions
Do I pay NI after State Pension age?
No. Once you reach State Pension age, you stop paying employee NI (Class 1) and self-employed NI (Classes 2 and 4), even if you continue working. Your employer still pays employer NI on your earnings. This makes employing workers over State Pension age slightly cheaper in personal tax terms, but costs the employer the same.
Is there a cap on how much NI I pay?
There is no absolute cap, but the rate drops from 8% to 2% above the Upper Earnings Limit (£50,270). Someone earning £200,000 pays NI of 8% on £37,700 (£3,016) plus 2% on £149,730 (£2,994.60), totalling £6,010.60. The 2% upper rate means NI on very high earnings is relatively modest compared to Income Tax.
Why did employer NI go up to 15% in April 2025?
The increase from 13.8% to 15%, combined with the threshold reduction from £9,100 to £5,000, was announced in the October 2024 Autumn Budget. The government estimated it would raise approximately £25 billion per year, making it one of the largest single tax increases in recent UK history. The revenue funds increased public spending, particularly for the NHS and public sector pay.
I have multiple jobs. Do I pay NI on each one separately?
Each employment is assessed independently for NI purposes. If you have two part-time jobs each paying £20,000, you pay 8% NI on £7,430 (£20,000 minus £12,570) in each job, totalling £1,188.80. If you had a single job paying £40,000, you would pay 8% on £27,430, totalling £2,194.40. Having two jobs can mean paying less NI overall if each job falls below the UEL. However, if your combined earnings exceed the UEL, you may be able to defer NI on one job by applying to HMRC. See our second job calculator for combined scenarios.
Do dividends attract National Insurance?
No. Dividend income is not subject to National Insurance for either the recipient or the paying company. This is a key reason company directors structure their pay as a low salary plus dividends: the dividend portion avoids both employee NI (8%/2%) and employer NI (15%). See our dividend tax calculator for optimal extraction strategies.