National Insurance, often shortened to NI, is a UK contribution deducted from employee pay through payroll once earnings are above the relevant threshold. It is separate from Income Tax but also reduces net pay.
How National Insurance works
For employees, National Insurance is usually calculated through payroll. Your employer uses your earnings, pay period and NI category letter to calculate the employee NI deduction.
Employee NI is then deducted from gross pay before net pay is paid to you. Employers also pay employer National Insurance separately.
net pay = gross pay
- PAYE Income Tax
- employee National Insurance
- pension contributions
- other deductions
Employee National Insurance rates and thresholds
For standard category A employees in 2026/27, employee National Insurance starts above the primary threshold. The main employee rate applies between the primary threshold and upper earnings limit, then a lower rate applies above that.
Equivalent to £242 per week or £1,048 per month.
For category A earnings between the threshold and upper earnings limit.
Above this, the employee rate is 2% for category A.
| 2026/27 employee NI item | Amount or rate | Simple meaning |
|---|---|---|
| Primary threshold | £12,570 per year | Employee NI usually starts above this level. |
| Upper earnings limit | £50,270 per year | The rate changes above this level. |
| Main employee rate | 8% | Standard category A employee rate between threshold and upper earnings limit. |
| Additional employee rate | 2% | Standard category A employee rate above the upper earnings limit. |
Different NI category letters can change the calculation, so always check your payslip and employment situation.
National Insurance vs Income Tax
National Insurance and PAYE Income Tax both reduce take-home pay, but they are not the same thing.
PAYE Income Tax
Tax collected through payroll using tax code, allowances and income tax bands.
National Insurance
Contribution based on earnings, thresholds and NI category letter.
Need the full PAYE and NI explanation?
Read the guide explaining how both deductions affect salary and take-home pay.
Where National Insurance appears on a payslip
National Insurance is usually shown in the deductions section of a payslip. It may appear as “NI”, “NIC”, “National Insurance” or “Employee NI”.
- NI this period: the amount deducted from this payslip.
- NI year to date: the total deducted so far in the tax year.
- NI category: a letter that affects the payroll calculation.
- Taxable pay and NIable pay: these can differ depending on payroll setup and deductions.
If your weekly earnings are above the primary threshold, employee National Insurance may be deducted from the earnings above that threshold.
Why National Insurance matters
National Insurance matters because it directly affects take-home pay. A pay rise, bonus, overtime or salary sacrifice arrangement can change the NI deducted from your payslip.
- Pay rises: extra earnings can increase employee NI deductions.
- Bonuses and overtime: higher pay in a period can increase NI for that period.
- Salary sacrifice: some arrangements can reduce NIable pay.
- Budgeting: net pay is lower after NI and other deductions.
- Payslip checks: an incorrect NI category can affect deductions.
Calculate National Insurance and take-home pay
The take-home pay calculator estimates employee National Insurance alongside PAYE Income Tax, pension contributions and student loan repayments.
Estimate NI and net pay
Enter salary, region, pension and student loan details for an estimated take-home result.
National Insurance FAQs
What does NI stand for?
NI stands for National Insurance.
Is National Insurance deducted before I get paid?
Yes. Employee National Insurance is usually deducted through payroll before net pay is sent to your bank account.
Is National Insurance the same as PAYE?
No. PAYE is the system used to collect Income Tax. National Insurance is a separate payroll deduction.
Why did my National Insurance change?
Common reasons include a pay rise, bonus, overtime, NI category change, salary sacrifice arrangement or payroll correction.