What Is National Insurance (NI)?
Compulsory UK government contributions paid by employees and employers that fund state pension, NHS, and welfare benefits.
Definition
National Insurance (NI) contributions are payments made by employees, employers, and the self-employed that build entitlement to the state pension and other benefits including statutory sick pay, maternity pay, and jobseeker's allowance. For employees (Class 1 contributions in 2026/27): you pay 8% on earnings between £12,570 and £50,270 per year, and 2% on everything above £50,270. Employers pay an additional 13.8% above the secondary threshold. You need 35 qualifying years of NI contributions to receive the full new state pension (£230.25 per week in 2026). NI is collected through PAYE alongside income tax.
Formula
Example
On a £45,000 salary: NI = 8% x (45,000 - 12,570) = 8% x £32,430 = £2,594 per year.