What is National Insurance? UK Definition 2026/27
Quick Answer
Contributions paid by employees and employers that fund state benefits.
Definition of National Insurance
National Insurance Contributions (NICs) fund the state pension, NHS, and some benefits. Employees pay 8% on earnings £12,570-£50,270 and 2% above that. Employers pay 15% on earnings above £5,000. Self-employed pay Class 2 (£3.45/week if profits over £6,845) and Class 4 (6%/2%).
National Insurance — Key Facts for 2026/27
| Employee main rate | 8% |
| Employee upper rate | 2% |
| Employer rate | 15% |
| Self-employed Class 4 | 6%/2% |
How National Insurance Works — Example
- 1Employee NI: (£50,000 - £12,570) × 8% = £2,994
- 2Employer NI: (£50,000 - £5,000) × 15% = £6,750
- 3Total NI cost: £9,744
- 4Employee take home impact: £2,994
How National Insurance Affects Your Tax
NI is a significant cost for both employees and employers. Unlike income tax, there's no equivalent of Personal Allowance for employer NI, and it continues at 2% with no cap for employees above the UEL.
Official HMRC Guidance on National Insurance
For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.
HMRC: National InsuranceFrequently Asked Questions about National Insurance
Related Tax Terms
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.