National Insurance (UK)
The UK's second payroll tax — funds the state pension, NHS, and unemployment benefits.
National Insurance (NI) is the UK's social-insurance contribution. For employees on a Class 1 PAYE-style contract, NI is deducted alongside income tax each pay period. For 2025/26, the rates are: 0% below the Primary Threshold (£12,570/year), 8% from the Primary Threshold to the Upper Earnings Limit (£50,270), and 2% above the UEL.
NI thresholds match income-tax thresholds at the lower end but diverge above the UEL — making the combined marginal rate above £50,270 equal to 42% (40% income tax + 2% NI), not 40%.
NI contributions feed into entitlement for the state pension, statutory sick pay, and contributory jobseeker's allowance. The number of qualifying years counts toward the state-pension amount on retirement. Self-employed taxpayers pay Class 2 and Class 4 NI under a different schedule — not modeled by this calculator, which assumes a Class 1 (employee) PAYE pattern.
Calculator pages that use this term
See also
- PAYE (Pay As You Earn) — The UK system for collecting income tax + National Insurance directly from payroll each month.
- Personal Allowance (UK) — The slice of annual UK income that is not subject to income tax — £12,570 for 2025/26.
- Higher-rate threshold (UK) — The UK income level at which the 40% higher-rate income-tax band begins — £50,270 for 2025/26.
- Marginal tax rate — The percentage paid in tax on the next unit of income earned — distinct from the average effective rate.