National Insurance: A Complete UK Guide

What is National Insurance?

National Insurance (NI) is a tax on earnings that funds the State Pension, NHS, and certain benefits. Unlike income tax, NI contributions also build your entitlement to the State Pension — you need 35 qualifying years for the full amount. NI is separate from income tax and has its own rates and thresholds.

"National Insurance (NI) is a tax on earnings that funds the State Pension, NHS, and certain benefits"

NI Rates for Employees 2025/26

You pay 8% NI on earnings between £12,570 and £50,270 per year (Class 1). Above £50,270, the rate drops to 2%. Your employer also pays 15% on your earnings above £5,000 (from April 2025). NI is collected via PAYE along with income tax. You stop paying NI when you reach State Pension age, even if you continue working.

NI for the Self-Employed

Self-employed people pay Class 4 NI: 6% on profits between £12,570 and £50,270, and 2% above that. Class 2 NI (£3.45/week, £179.40/year) used to be compulsory but was abolished in April 2024 — you can now pay it voluntarily to protect your State Pension entitlement if your profits are below the Small Profits Threshold (£6,725).

How NI Builds Your State Pension

Each year you pay NI (or receive NI credits) counts as a qualifying year toward your State Pension. You need a minimum of 10 qualifying years to receive anything, and 35 years for the full £230.25/week (2025/26). Check your NI record and State Pension forecast at gov.uk/check-your-state-pension — this takes 5 minutes and is essential planning information.

"Each year you pay NI (or receive NI credits) counts as a qualifying year toward your State Pension"

NI Credits

You may receive NI credits (which count toward your State Pension) even if you are not paying NI. Credits are available when: claiming Child Benefit for a child under 12, on Statutory Sick Pay, on Universal Credit, on Carer's Allowance, and in some other circumstances. Crucially, if you are not working and caring for a child, you must still claim Child Benefit to receive NI credits — even if you will pay the High Income Charge.

Filling NI Gaps

You can check for gaps in your NI record going back to 2006 at gov.uk. Buying a missing year currently costs between £824 and £1,029 as a voluntary Class 3 contribution. If you are below State Pension age, this often represents exceptional value — one year of top-up can add £329/year to your State Pension for life. The deadline for buying years back to 2006 was extended but check current rules at gov.uk.

NI and Your Payslip

Your payslip shows NI deducted under your NI category letter. Most employees are category A. Category M applies to employees under 21 (lower employer NI). Category H applies to apprentices under 25. If your letter seems wrong, check with HMRC — an incorrect category can mean you overpay or underpay NI.

"Your payslip shows NI deducted under your NI category letter"

When You Stop Paying NI

Employees stop paying NI when they reach State Pension age (currently 66). If you continue working after State Pension age, you keep your full salary without NI deductions — worth up to £1,500/year more in take-home pay. Self-employed people also stop paying Class 4 NI from the start of the tax year after they reach State Pension age.