What is the UK National Insurance?
National Insurance funds the State Pension and certain benefits, and it builds your qualifying years. Employees pay Class 1 at 8% between the Primary Threshold (£12,570) and Upper Earnings Limit (£50,270), then 2% above.
The self-employed pay Class 4 at 6% and 2% on the same bands. Class 2 is no longer charged: if profits are £7,105 or more it is treated as paid, and below that level it can be paid voluntarily at £3.65 a week. Employers separately pay 15% above the £5,000 secondary threshold.
Formula & worked example
Class 4 = same bands at 6% and 2%
Worked example: £42,000 as an employee. NI applies to £29,430 (the amount above £12,570) at 8% = £2,354 a year, or about £196 a month — an effective NI rate of 5.6%. Your employer additionally pays 15% on the £37,000 above the £5,000 secondary threshold — about £5,550.
How to use this uk national insurance calculator
- Enter your annual earnings or self-employed profits.
- Select employed or self-employed — Class 4 rates are lower than Class 1.
- NI is charged per pay period for employees, so irregular pay can change the annual total.
- Note NI is not charged on pension income at all.
Smart tips
- You need 35 qualifying years of NI for a full State Pension, and at least 10 for any State Pension.
- Salary sacrifice reduces NI for both you and your employer — one of the few genuinely free wins in UK payroll.
- Check your NI record on the gov.uk portal; you can often buy back missing years cheaply.
- NI is not payable on income from pensions, savings interest, dividends or rental profit.
- Once you reach State Pension age you stop paying employee NI, even if you keep working.
Frequently asked questions
How much National Insurance do I pay?
8% on earnings between £12,570 and £50,270, then 2% above. Self-employed Class 4 rates are 6% and 2%.
Do I pay NI on pension income?
No. National Insurance is only charged on earnings from employment or self-employment, not on pension income.
How many NI years do I need for a full State Pension?
35 qualifying years for the full new State Pension, with a minimum of 10 years to receive anything.
Can I pay voluntary NI contributions?
Yes, Class 3 voluntary contributions can fill gaps in your record. It is often excellent value for boosting State Pension entitlement.
Want the theory behind the numbers? Browse the Money Blog for worked guides.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 15 Oct 2026. Sources: GOV.UK — Income Tax rates and Personal Allowance, GOV.UK — National Insurance rates and thresholds. How we check these numbers.