National Insurance FAQs 2026/27
What is the difference between Class 1 employee and employer NI?
Class 1 employee NI (primary contributions) is deducted directly from your pay at 8% on earnings between £12,570 and £50,270, and 2% above £50,270. Class 1 employer NI (secondary contributions) is paid by your employer on top of your wage at 13.8% on earnings above £9,100 · you never see this deducted from your payslip, but it significantly raises the total cost of employing you. Employers can reduce their annual employer NI bill by up to £10,500 using the Employment Allowance.
How much NI do self-employed people pay?
Self-employed people pay two types of NI. Class 2: £3.45/week (£179.40/year) if profits exceed £12,570 · this counts towards your State Pension and other contributory benefits. Class 4: 6% on profits between £12,570 and £50,270, and 2% above £50,270. Both are collected via Self Assessment alongside income tax. Unlike employees, self-employed people pay no employer NI.
What NI category am I?
Most employees are Category A (standard rate: 8% between PT and UEL, 2% above UEL). You may be a different category if: you applied for the married women's reduced rate before 1977 (Category B: 1.85% PT to UEL); you are over State Pension age (Category C: 0% NI); you are an apprentice under 25 (Category H: 0% up to UEL, 2% above); or you are under 21 (Category M: 0% up to UEL, 2% above). Your employer assigns your category · if in doubt, you are almost certainly Category A.
What is the Employment Allowance in 2026/27?
The Employment Allowance lets eligible employers reduce their annual employer Class 1 NI bill by up to £10,500 in 2026/27. It is available to most employers with a total employer NI bill below £100,000 in the previous tax year. If you employ only yourself as a sole director with no other employees you cannot claim it. The allowance cannot reduce your bill below zero · any unused allowance is lost.
Do I pay NI above the Upper Earnings Limit?
Yes, but at a much lower rate. Once your earnings exceed the Upper Earnings Limit (£50,270 in 2026/27), employee Class 1 NI drops to 2% on all earnings above that figure. This means NI contributions never stop entirely · they just become much smaller above the UEL. Employer NI continues at 13.8% on all earnings above the Secondary Threshold (£9,100) with no upper limit.
How is the total employment cost calculated?
The total cost to an employer of hiring someone equals the gross salary plus employer Class 1 NI. For example, paying a £35,000 salary in 2026/27 costs the employer approximately £39,182 in total (£35,000 salary + £4,182 employer NI at 13.8% above £9,100). This figure can be reduced if the employer is eligible for the Employment Allowance. When budgeting for a hire, always factor in employer NI on top of the advertised salary.
For informational purposes only · Not financial advice · NI rates shown are for 2026/27 · Figures are rounded and may differ slightly from HMRC calculations