National Insurance, explained.

National Insurance is the second deduction on every payslip, a separate tax on earnings that funds contributory benefits and the State Pension. If you are an employee, you pay Class 1 contributions, and they work differently from income tax in three ways: the thresholds are different, the shape is different (the rate fallsat the top), and your pension contributions usually don’t reduce it.

The 2026/27 employee rates

Nothing below £12,570 a year. Then 8% on earnings between £12,570 and £50,270, and 2% on everything above. On £30,000 that is 8% of £17,430, £1,394.40 a year. Unlike income tax, NI is the same across England, Scotland, Wales and Northern Ireland, and (for category A) the same whatever your age until you reach State Pension age, at which point employee NI stops entirely.

The employer’s 15% you never see

Your employer separately pays 15% on almost everything they pay you above £5,000 a year. It never appears on your payslip, but it is part of the real cost of employing you, on a £30,000 salary it adds £3,750. It is why salary-sacrifice arrangements exist: pay given up before payroll avoids both employee and employer NI, which is why employers often pass some of the saving on.

Why the rate falling at the top matters

Because NI drops from 8% to 2% at £50,270 exactly where income tax jumps from 20% to 40%, the combined marginal rate moves from 28% to 42%, a smaller step than the headline tax bands suggest. The calculator’s marginal-rate chip shows the combined figure for your exact salary.

What counts as NI-able pay

Salary, overtime and most cash pay count. Pension contributions through a net-pay or relief-at-source scheme do not reduce NI-able pay, only salary sacrifice does, because the pay is given up before it reaches you. That is exactly how the calculator treats each method, per GOV.UK’s rates and categories. Estimates, not tax advice.