National Insurance (NI) is one of the biggest deductions from most UK workers’ payslips — yet many people have little idea what it actually pays for or how it affects their future benefits. This guide explains what NI is, what you pay, and why it matters.
What Is National Insurance?
National Insurance is a tax on earnings paid by employees, employers, and the self-employed. It funds a range of state benefits, most notably the State Pension and the NHS. Unlike income tax, which funds general government spending, NI contributions are hypothecated — meaning they’re specifically ring-fenced for social security purposes.
What Your NI Contributions Fund
- State Pension — Your NI record determines how much State Pension you receive. You need 35 qualifying years for the full new State Pension (£221.20/week in 2026/27).
- NHS — A significant portion of NI revenue goes towards funding the National Health Service.
- Statutory payments — Maternity, paternity, adoption, and sick pay.
- Jobseeker’s Allowance and other benefits — Contribution-based employment and support allowance, bereavement support payment, and more.
NI Contribution Classes
There are several classes of NI, depending on your employment status and income level.
Class 1: Employees and Employers
If you’re employed, both you and your employer pay Class 1 NI. This is the most common type.
Employee rates (2026/27):
| Earnings Band | Weekly | Monthly | Annual | Rate |
|---|---|---|---|---|
| Below £242 (£12,570/year) | £0 | £0 | £0 | 0% |
| £242 - £967 (£12,570 - £50,270) | £58.00 - £764.00 | £251.30 - £3,308.80 | £3,015 - £39,700 | 8% |
| Above £967 (£50,270) | Above £764.00 | Above £3,308.80 | Above £39,700 | 2% |
Employer rates (2026/27):
| Earnings Band | Weekly | Monthly | Annual | Rate |
|---|---|---|---|---|
| Below £175 (£9,100/year) | £0 | £0 | £0 | 0% |
| Above £175 (£9,100) | Above £34.00 | Above £147.30 | Above £1,768 | 13.8% |
Class 2: Self-Employed (Flat Rate)
If you’re self-employed and your profits exceed the Small Profits Threshold (£12,570 for 2026/27), you pay a flat weekly rate. Class 2 NI counts towards your State Pension record and other contributory benefits.
For 2026/27, the Class 2 rate is £3.45 per week (£179.40 per year). If your profits are between the Small Profits Threshold and the Lower Profits Limit (£12,570), you can pay voluntarily but aren’t required to.
Class 4: Self-Employed (Profits-Based)
Class 4 NI is charged on self-employed profits above the Lower Profits Limit. Unlike Class 2, it does not count towards your State Pension record — it’s purely a tax on profits.
| Profits Band | Rate |
|---|---|
| Below £12,570 | 0% |
| £12,570 - £50,270 | 8% |
| Above £50,270 | 2% |
Quick Comparison
| Class | Who Pays | What It Counts Towards | Rate (2026/27) |
|---|---|---|---|
| Class 1 (Employee) | Employees | State Pension, benefits | 8% / 2% |
| Class 1 (Employer) | Employers | Nothing for employee | 13.8% |
| Class 2 | Self-employed | State Pension, benefits | £3.45/week |
| Class 4 | Self-employed | Nothing (tax only) | 8% / 2% |
Voluntary NI Contributions
You can top up gaps in your NI record by making voluntary contributions. This is particularly valuable if you’re approaching State Pension age and have fewer than 35 qualifying years.
Why Buy Missing Years?
Each additional qualifying year adds roughly £275 to your annual State Pension. The cost of a voluntary Class 3 contribution for a full year is £179.40 — meaning you could receive back roughly 1.5 times what you pay in, every year for the rest of your life after reaching State Pension age.
For example, if you have 30 qualifying years and buy 5 more:
- Cost: 5 x £179.40 = £897
- Extra annual pension: 5 x £275 = £1,375
- Payback period: Less than 1 year
How to Pay
- Class 3 voluntary contributions — £179.40 per year (2026/27). These count towards your State Pension and contributory benefits.
- Class 2 voluntary contributions — £179.40 per year. Available if you were self-employed or had small earnings below the threshold.
You can pay online through the gov.uk voluntary NI contributions service or by calling the NI helpline.
Time Limits
You can normally only fill gaps from the past 6 years. However, there’s a special window allowing you to fill gaps from 2006/07 onwards — this was extended and is available until 5 April 2025. Check with HMRC if you’re unsure about your eligibility.
NI Credits
If you can’t work — because you’re caring for someone, unemployed, or on certain benefits — you may still receive NI credits. These count as qualifying years without you having to pay anything.
Carer’s Credit
If you spend at least 20 hours per week caring for someone with substantial caring needs, you may qualify for Carer’s Credit. This is especially important for unpaid carers who would otherwise have gaps in their NI record.
Parent’s Credit
If you’re responsible for a child under 12, you automatically receive NI credits through the Child Benefit system. Even if you don’t claim Child Benefit (for example, if your partner earns more), you should still register to ensure you receive the credits.
Other Credits
- Jobseeker’s Allowance credits — If you’re receiving contribution-based JSA.
- Employment and Support Allowance credits — If you’re receiving contribution-based ESA.
- Universal Credit credits — If you’re receiving UC and not working enough hours.
- Statutory adoption/maternity/paternity credits — While receiving statutory payments.
How to Check Your NI Record
You can check your NI record online through the gov.uk Check your State Pension forecast service. This will show you:
- How many qualifying years you have
- What your projected State Pension will be
- Any gaps in your record
- Whether you could increase your pension by paying voluntary contributions
You can also call the NI helpline on 0300 200 3500 to request a statement by post.
What to Look For
- Gaps in your record — These reduce your State Pension. Fill them with voluntary contributions if you can.
- Credits you might be missing — If you’ve been caring for children or vulnerable adults, check that you’ve received the credits you’re entitled to.
- Years before 2016 — These may count differently under the old State Pension system. Use the gov.uk forecast tool to see how they affect your total.
Key Takeaways
- NI is a separate tax from income tax, funding the State Pension and NHS.
- Employees pay 8% between £12,570 and £50,270, then 2% above that (2026/27).
- Employers pay 13.8% on earnings above £9,100.
- Self-employed people pay both Class 2 (flat rate) and Class 4 (profits-based).
- Voluntary contributions at £179.40/year can boost your pension by roughly £275/year — a strong return.
- Check your record regularly on gov.uk to spot gaps before you retire.