National Insurance rates for 2026/27: key updates for small business owners

Published Thursday 22 October 2026

Table of contents

• How National Insurance works
• What changed this tax year?
• What employees pay
• What employers pay
• What self-employed people pay
• How National Insurance applies to benefits and PSAs
• How to calculate National Insurance
• Run your payroll and National Insurance with Xero
• FAQs on National Insurance rates

Key takeaways

• You pay National Insurance if you’re over 16 and under state pension age, and it’s charged on pay, profits, benefits and expenses
• For 2026/27, employees pay 8% and 2%, employers pay 15% above £5,000 a year and self-employed people pay 6% and 2% on profits
• The April 2025 employer rate and threshold changes still apply in 2026/27, and Employment Allowance stays at £10,500
• You can work out National Insurance yourself using weekly or monthly thresholds, or let payroll software calculate it every pay run

How National Insurance works

For 2026/27, employees pay 8% National Insurance on weekly earnings between £242.01 and £967 and 2% above that, employers pay 15% on employee earnings above £5,000 a year, and self-employed people pay Class 4 at 6% on profits between £12,570 and £50,270 and 2% above £50,270.

National Insurance (NI) is a direct tax that helps fund the state pension and public services such as the NHS. Employers collect their employees’ contributions through payroll and pay their own share on top.

You make National Insurance contributions (NICs) once your income or profits pass a set threshold. The rate you pay depends on your category, job status, age and income.

Contributions are grouped into classes, and each class covers a different type of payer:

• Employees pay Class 1 contributions if they’re under state pension age and earn more than £242 a week from one job
• Employers pay Class 1 contributions on employee earnings above the secondary threshold
• Employers pay Class 1A or Class 1B contributions on expenses and benefits they give employees
• Self-employed people pay Class 4 contributions on profits and can choose to pay Class 2 voluntarily

Your class decides which rates and thresholds apply, so the sections below cover each one in turn.

What changed this tax year?

Class 1 and Class 4 National Insurance rates and thresholds stayed the same for the new tax year that started on 6 April 2026. That means the April 2025 changes still apply.

In April 2025, the employer rate rose from 13.8% to 15% and the secondary threshold fell from £9,100 to £5,000 a year. Employment Allowance also rose to £10,500, so more businesses can reduce their bill.

Here are the 2026/27 figures, as published in GOV.UK’s rates and thresholds for employers:

• Employees pay 8% Class 1 on weekly earnings from £242.01 to £967 and 2% above £967
• Employers pay 15% Class 1 on earnings above the £96 a week secondary threshold (£5,000 a year)
• Self-employed people pay Class 4 at 6% on profits from £12,570 to £50,270 and 2% above, with voluntary Class 2 at £3.65 a week
• Employers pay 15% Class 1A on most taxable benefits

In 2025/26, employers paid 15% above £5,000, employees paid 8% and 2% on the same £242 and £967 thresholds, and Class 2 was £3.50 a week with a £6,845 small profits threshold.

So the only movement for 2026/27 is in voluntary Class 2, where the weekly rate is now £3.65 and the small profits threshold is £7,105.

What employees pay

For 2026/27, category A employees pay Class 1 National Insurance of:

• 8% on earnings between £242.01 and £967 a week (£1,048 and £4,189 a month)
• 2% on earnings above £967 a week (£4,189 a month)

They pay nothing on the first £242 a week (£12,570 a year). Earnings from the £129 a week lower earnings limit (£6,708 a year) still count towards their state pension.

Employees pay Class 1 contributions if they’re over 16, under state pension age and earn more than £242 a week. As an employer, you deduct their contributions through Pay As You Earn (PAYE) and pass them to HM Revenue and Customs (HMRC). Payroll software can apply the rates so the right amounts come off each payslip automatically.

Each National Insurance category has a letter, such as A, B, C or D. Most employees fall into category A, and you can check the others in HMRC’s list of category letters.

For example, an employee on £1,050 a week pays nothing on the first £242, 8% on the next £725 and 2% on the remaining £83. HMRC’s National Insurance calculator can help you check the amounts.

What employers pay

Here’s what employers pay for 2026/27:

• 15% Class 1 on employee earnings above £96 a week (£417 a month, £5,000 a year)
• no upper earnings limit for category A employees
• 15% Class 1A and Class 1B on expenses and benefits
• up to £10,500 off your annual bill with Employment Allowance, if you’re eligible

Your contributions and your employees’ contributions together make up the full Class 1 amount. Unlike employee NI, the 15% employer rate applies to all earnings above the secondary threshold, with no cap for category A.

You also pay Class 1A or 1B on expenses and benefits you give employees, such as company cars. Class 1A also applies to some lump sums, such as certain redundancy payments.

Eligible employers can cut their yearly National Insurance bill by up to £10,500 with Employment Allowance. GOV.UK explains how to claim the allowance.

What self-employed people pay

Self-employed National Insurance is based on your profits. Most self-employed people pay Class 4, and some choose to pay Class 2 voluntarily.

You pay Class 4 contributions if your profits are above £12,570 in a tax year. For 2026/27, the rate is 6% on profits from £12,570 to £50,270 and 2% above £50,270, according to GOV.UK’s self-employed rates.

You pay Class 4 along with your Income Tax through Self Assessment. Class 2 works differently, as it’s now optional.

Class 2 National Insurance

Compulsory Class 2 contributions stopped from 6 April 2024. If your profits are above the £7,105 small profits threshold, you get the same entitlements as if you’d paid them.

You can still choose to pay if your profits are below £7,105 or your gross income is £1,000 or less. GOV.UK sets out who can pay voluntarily, which also includes some specific jobs.

For 2026/27, the voluntary rate is £3.65 a week. Paying it can help you fill gaps in your National Insurance record and protect your state pension.

How National Insurance applies to benefits and PSAs

As an employer, you pay Class 1A National Insurance at 15% on most benefits you give employees, such as health insurance. HMRC’s A to Z of expenses and benefits shows what you need to report and pay.

A PAYE settlement agreement (PSA) lets you settle the tax and National Insurance on minor, irregular or impractical expenses and benefits in a single payment. Examples include small gifts or relocation costs.

Under a PSA, you pay Class 1B National Insurance instead of the Class 1A you’d usually pay after the tax year ends.

How to calculate National Insurance

You can work out an employee’s National Insurance by hand using the 2026/27 weekly or monthly thresholds. Follow these steps:

1. Find the employee’s gross pay for the pay period
2. Take off the £242 weekly primary threshold (£1,048 monthly), as nothing is due on this amount
3. Multiply earnings between the primary threshold and the £967 upper earnings limit by 8%
4. Multiply any earnings above £967 by 2%
5. Add the two amounts together

Here’s how that works for an employee earning £1,010 a week, based on 2026/27 thresholds. They pay nothing on the first £242, 8% on the next £725 up to £967 and 2% on the remaining £43.

8% of £725 = £58.00

2% of £43 = £0.86

That’s £58.86 National Insurance a week. The same approach works for your self-employment tax, using the annual Class 4 profit bands instead.

Payroll software such as Xero applies the right rates for you, so it’s easier to send HMRC the correct amounts and pay your people accurately.

Run your payroll and National Insurance with Xero

Xero Payroll makes every pay run simpler, with less manual effort and less time spent on reporting. It automates calculations for pay, pensions, tax and leave, so everyone gets paid the right amount.

Xero also files Real Time Information (RTI) reports with HMRC automatically every pay run, so your submissions stay on time. Your data is backed up securely in the cloud, so you can run payroll anytime, from anywhere.

With the Xero Me app, your employees can view payslips, request leave and submit timesheets themselves, which saves you admin. Choose the plan that suits your business and get one month free.

FAQs on National Insurance rates

Here are answers to common questions about National Insurance rates for 2026/27.

How much is National Insurance in 2026/27?

It depends on your class and your category letter. For example, employers pay 0% on earnings up to £50,270 a year for employees under 21 in category M, while the employee still pays the standard 8% and 2%.

What is the employer NI rate for 2026/27?

Employers pay 15% on each employee’s earnings above £5,000 a year (£417 a month), with no upper limit for category A. If your business is eligible, Employment Allowance can take up to £10,500 off the total.

How much National Insurance do I pay?

On a £30,000 salary, you pay 8% of £17,430 (the amount above £12,570), which is £1,394.40 a year.

How do I calculate NI from a gross salary?

Use the monthly thresholds: an employee on £4,500 a month pays nothing on the first £1,048, then 8% on the £3,141 up to £4,189, which is £251.28. They also pay 2% on the remaining £311, which is £6.22, making £257.50 a month.

Do company directors pay NI differently?

Yes, directors pay National Insurance on their annual earnings, based on total pay for the tax year so far, including bonuses. You can calculate it each time you pay them, then use payroll software to check at year end whether any extra is due.

What if I receive both PAYE and self-employed income?

Your employer deducts Class 1 National Insurance from your wages, and you may also pay Class 4 on your self-employed profits. HMRC works out what you owe on your Self Assessment tax return.