National Insurance (NI) is a separate tax from income tax, charged on earnings under the Social Security Contributions and Benefits Act 1992. It funds the State Pension and contributory benefits. Two NI bills sit behind your job: the employee contribution, which comes out of your pay, and the employer contribution, which does not, but rose sharply in April 2025. Only the employee line reduces your net pay.
What are the 2025/26 NI rates?
| Who pays | Earnings band (annual) | Rate 2025/26 |
|---|---|---|
| Employee | Up to £12,570 (Primary Threshold) | 0% |
| Employee | £12,570 – £50,270 (to Upper Earnings Limit) | 8% |
| Employee | Above £50,270 | 2% |
| Employer | Up to £5,000 (Secondary Threshold) | 0% |
| Employer | Above £5,000 | 15% |
Employee NI vs employer NI: what is the difference?
Your payslip shows only the employee contribution: 8% on monthly earnings between £1,048 and £4,189, then 2% above (the Primary Threshold and Upper Earnings Limit). The employer contribution, 15% above £5,000 a year, is paid on top of your salary straight to HMRC and never appears in your net pay. It matters to you indirectly: a higher employer NI bill is one reason pay rises and hiring slow.
What changed in April 2025?
Two things, both on the employer side. The secondary rate moved from 13.8% to 15%, and the Secondary Threshold, the point at which employers start paying, fell from £9,100 to £5,000 a year. Employee rates and thresholds were unchanged. So if your take-home looks the same but your employer mentions higher costs, this is why. The category letter on your NI line (usually A) sets which rate table applies; under-21s, apprentices and those over State Pension age use different letters.
Why does NI matter beyond the deduction?
Paying Class 1 NI builds qualifying years toward the State Pension; 35 qualifying years earns the full new State Pension. Earn below the Primary Threshold and you pay nothing, but you may still earn a qualifying year if you are above the Lower Earnings Limit. Check your NI line against the official thresholds; a wrong category letter quietly over- or under-deducts every payday.
Primary sources
- Rates and thresholds for employers 2025 to 2026 — gov.uk — Authoritative 2025/26 Class 1 employee and employer rates and thresholds
- National Insurance rates and categories — gov.uk — Category letters and how much each deducts
- Social Security Contributions and Benefits Act 1992 — legislation.gov.uk — Primary legislation for Class 1 National Insurance
- The Social Security (Contributions) Regulations 2001 — legislation.gov.uk — SI 2001/1004 — contribution mechanics and thresholds
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