National Insurance (NI) is a tax that helps fund state benefits, including the State Pension. The rules can sometimes feel complicated, but understanding the basics can help you plan and avoid surprises.

Here is a straightforward overview of the National Insurance rules for the 2026/27 tax year.

For employees

If you are employed, National Insurance is normally deducted automatically through your payroll.

For the 2026/27 tax year:

• You don't pay National Insurance on earnings up to £242 per week.
• You pay 8% on earnings between £242.01 and £967 per week.
• You pay 2% on earnings above £967 per week.

Even if you earn between £129 and £242 per week and do not pay National Insurance, you may still receive National Insurance credits towards certain benefits and your State Pension record.

Employees generally stop paying Class 1 National Insurance once they reach State Pension age.

For employers

Employers also pay National Insurance on their employees' earnings.

For 2026/27:

• No employer National Insurance is due on earnings up to £96 per week.
• Employers pay National Insurance at 15% on earnings above £96 per week.

There are some exceptions. Employers may qualify for a nil rate on certain employees, including military veterans, employees under 21 and apprentices under 25, on earnings up to £967 per week.

Employers also pay:

• Class 1A National Insurance at 15% on taxable employee benefits.
• Class 1B National Insurance at 15% on PAYE Settlement Agreements.

For self-employed individuals

The National Insurance system for the self-employed changed recently, making it simpler for many people.

For 2026/27:

• If your profits are more than £12,570, you will pay Class 4 National Insurance.
• The rate is 6% on profits between £12,570 and £50,270.
• The rate falls to 2% on profits above £50,270.

Most self-employed people no longer need to pay mandatory Class 2 National Insurance. However, if your profits are below £7,105, you can choose to make voluntary Class 2 contributions at £3.65 per week to protect your National Insurance record.

Self-employed individuals usually pay their National Insurance through their annual Self Assessment tax return.

What about landlords?

Many landlords are surprised to learn that rental income does not usually attract National Insurance in the same way as employment or self-employment income.

For most landlords, rental profits are subject to Income Tax but not Class 4 National Insurance. However, there are special National Insurance rules for landlords who run a property business, particularly when the activity goes beyond simply collecting rent and involves providing significant services.

Because every property portfolio is different, it is important to seek professional advice if you are unsure how the rules apply to your circumstances.

Protecting your State Pension record

Your National Insurance record is important because it affects your entitlement to the State Pension and certain benefits.

If you have gaps in your record, you may be able to make voluntary Class 3 contributions. The Class 3 rate for 2026/27 is £18.40 per week.

How can we help

Whether you are an employee with additional income, a self-employed business owner, a landlord, or an employer managing payroll obligations, understanding your National Insurance position is an important part of effective tax planning.

We help individuals and businesses understand their tax responsibilities, stay compliant with HMRC requirements, and make informed financial decisions. If you would like advice on National Insurance, Self-Assessment, payroll, or Making Tax Digital, our team would be happy to help.

You can call us on 01623 490 120 or email This email address is being protected from spambots. You need JavaScript enabled to view it.