What employee National Insurance is
Who this guide is for: Written for employees reading a payslip, and for anyone comparing how employee and employer National Insurance differ.
Class 1 employee National Insurance is deducted from employed earnings through PAYE. Paying NI helps build your National Insurance record for the State Pension and certain state benefits.
It is separate from Income Tax — different thresholds, different rates, and shown as its own line on your payslip.
Employee versus employer National Insurance
| Aspect | Employee NI | Employer NI |
|---|---|---|
| Who pays | Employee (from pay) | Employer |
| Reduces take-home? | Yes | No |
| On employee payslip? | Usually yes | No (employer cost) |
Employer Class 1 rates, the Secondary Threshold and Employment Allowance are explained in Employer National Insurance Explained. Sole traders use Class 2 and Class 4 instead — see National Insurance for Sole Traders.
How employee NI works in 2026/27
For a standard category A employee:
- Below Primary Threshold (£12,570.00): no employee NI
- Between PT and UEL (£50,270.00): 8% main rate
- Above UEL: 2% on the excess
NI category letters (A, B, C, H, M and others) change which rates apply for some groups — for example reduced rates for certain married women, or special treatment for under-21 and apprentice categories. Your payslip shows the letter payroll is using. Category detail is a payroll topic; if your letter looks unexpected, check with payroll or HMRC rather than assuming an error.
Recent main employee Class 1 rate changes
| Period | Main rate |
|---|---|
| Before 6 January 2024 | 12% |
| 6 January 2024 to 5 April 2024 | 10% |
| From 6 April 2024 (including 2026/27) | 8% |
The higher rate above the Upper Earnings Limit stayed at 2% through these changes. Always confirm current rates on GOV.UK for your category.
Worked example
£40,000 salary — employee National Insurance
Tax year 2026/27 · England · tax code 1257L · no pension · no student loan · NI category A. Figures from the shared Income Tax / NI engine.
| Gross salary | £40,000.00 |
|---|---|
| Primary Threshold to Upper Earnings Limit (8%) | £2,193.92 |
| Total employee National Insurance (key figure) | £2,193.92 |
| Income Tax (separate) | £5,486.00 |
Estimate employee National Insurance alongside Income Tax Use the Income Tax Calculator
Qualifying salary sacrifice can reduce NI-able pay. To work backwards from take-home pay, use the Net to Gross Salary Calculator.
Common misunderstandings
- No NI means no tax. You can earn below the Primary Threshold and still pay Income Tax if taxable income exceeds the Personal Allowance.
- Employer NI is the same deduction. It is a separate employer liability — see Employer National Insurance Explained.