Class 1 Employee NI: Rates & Bands

Key facts

Employee Class 1 NI: 8% on earnings between £242/week and £967/week (2026/27).
Earnings above the Upper Earnings Limit (£967/week) are charged at 2%.
NI is deducted by your employer through PAYE alongside Income Tax.
Your NI category letter (A, B, C, H, M, Z) determines the exact rates that apply.
You stop paying employee NI when you reach State Pension age.

How Class 1 NI Is Deducted from Your Pay

Class 1 National Insurance is the NI paid by employees on their earnings from employment. It is deducted by your employer through PAYE (Pay As You Earn) alongside your Income Tax, so you never have to calculate or pay it yourself.^[1]

Employee NI Rates (2026/27)

Earnings Band	Weekly	Monthly	Annual	Employee Rate
Below Lower Earnings Limit	Below £129	Below £559	Below £6,708	0% (no NI record)
LEL to Primary Threshold	£129–£242	£559–£1,048	£6,708–£12,570	0% (NI record protected)
PT to Upper Earnings Limit	£242–£967	£1,048–£4,189	£12,570–£50,270	8%
Above Upper Earnings Limit	Above £967	Above £4,189	Above £50,270	2%

Understanding the Thresholds

Lower Earnings Limit (LEL): £129/week

This is the minimum you need to earn for the week to count on your NI record. Earnings below the LEL do not count at all — no NI is charged and no record is built.^[1]

Primary Threshold (PT): £242/week

This is where you actually start paying NI. The clever bit: earnings between the LEL (£129) and PT (£242) count towards your NI record without you paying anything. This is a hidden benefit that protects low earners.

Upper Earnings Limit (UEL): £967/week

Above this level, the employee rate drops from 8% to 2%. Unlike Income Tax, there is no equivalent of a “higher rate” — the NI rate actually decreases for high earners.

Example — employee earning £40,000/year:

First £12,570: £0 NI (below Primary Threshold)
£12,570 to £40,000 = £27,430 at 8% = £2,194.40
Total employee NI for the year: £2,194.40

Example — employee earning £60,000/year:

First £12,570: £0
£12,570 to £50,270 = £37,700 at 8% = £3,016.00
£50,270 to £60,000 = £9,730 at 2% = £194.60
Total employee NI: £3,210.60

NI Category Letters

Every employee is assigned an NI category letter that determines the rates applied. Your employer sets this based on your circumstances:^[1]

Letter	Applies To	Employee Rate (PT–UEL)	Employer Rate (above ST)
A	Standard employees (most common)	8%	15%
B	Married women / widows with reduced rate election	1.85%	15%
C	Employees over State Pension age	0%	15%
H	Apprentices under 25	8%	0% (up to UEL)
M	Employees under 21	8%	0% (up to UEL)
Z	Under 21, deferred NI	2%	0% (up to UEL)

Category A — Standard

This applies to the vast majority of employees. If you are aged between 21 and State Pension age and are not an apprentice, you will be on category A.

Category B — Reduced Rate

This only applies to married women and widows who elected for a reduced NI rate before 12 May 1977. Very few people still hold this election, and it is gradually being phased out.

Category C — Over State Pension Age

Once you reach State Pension age, you stop paying employee NI. Your employer should change your category to C. The employer still pays secondary NI on your earnings at the standard rate.^[3]

Categories H and M — Young Workers

Under-25 apprentices (H) and under-21 employees (M) pay the standard employee rate of 8%, but their employers pay 0% NI on earnings up to the Upper Earnings Limit. This makes it cheaper for employers to hire young workers.

How NI Is Deducted

NI is calculated and deducted by your employer each pay period (weekly, fortnightly, monthly, etc.). Unlike Income Tax, which uses cumulative calculations, NI is calculated on a per-period basis:^[2]

Each pay period is treated independently
The thresholds are scaled to match the pay period (weekly, monthly, etc.)
There is no cumulative “catching up” if you earn different amounts in different months

Tip: This per-period calculation means that if you receive a large bonus in one month, you may pay more NI overall than if the same total amount were spread evenly across the year. NI does not have a cumulative basis (except for directors).

NI vs Income Tax: Key Differences

Feature	Income Tax	Employee NI
Calculation basis	Cumulative (year to date)	Per pay period
Affected by tax code	Yes	No
Personal allowance	£12,570	N/A (uses Primary Threshold)
Pension contributions	Relief through tax code	NI relief if salary sacrifice
Stops at pension age	No	Yes

Frequently Asked Questions

How much Class 1 NI do I pay as an employee?

For the standard category A, you pay 8% on weekly earnings between £242 (Primary Threshold) and £967 (Upper Earnings Limit), and 2% on any earnings above £967 per week. For monthly-paid workers, the thresholds are £1,048 and £4,189 per month.

What do the NI category letters mean?

Your NI category letter determines the NI rates for you and your employer. Most employees are on category A (standard). Other categories include B (married women with reduced rate election), C (over State Pension age), H (apprentices under 25), M (employees under 21), and Z (under-21s with deferred NI).

Do I pay NI on my whole salary?

No. You pay 0% on earnings up to the Primary Threshold (£242/week). You only start paying NI on earnings above this level. However, earnings between the Lower Earnings Limit (£129/week) and the Primary Threshold still count towards your NI record without you paying anything.

When do I stop paying employee NI?

You stop paying employee National Insurance when you reach State Pension age. Your employer will change your NI category to C, which has a 0% employee rate. Your employer still pays secondary (employer) NI on your earnings.

Sources

National Insurance rates and categories — GOV.UK
National Insurance: introduction — GOV.UK
National Insurance and tax after State Pension age — GOV.UK