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National Insurance Thresholds

Updated: February 2026

National Insurance Contributions (NICs) remain an important consideration for employers, employees and company directors. For the 2025/26 tax year, employer NIC costs in particular are a key area to watch, and it is worth checking that your understanding (and budgeting) reflects the latest rates and thresholds.

Employees – when do NICs start?

Employees start paying Class 1 National Insurance once their earnings exceed the Primary Threshold.

  • Primary Threshold (PT): £12,570 per year
  • Main employee rate: 8% on earnings above the PT (up to the Upper Earnings Limit)
  • Additional employee rate: 2% on earnings above the Upper Earnings Limit

This means employees earning below £12,570 per year will not pay employee NICs.

Self-employed individuals

Self-employed National Insurance is mainly paid through Class 4 contributions based on annual profits.

  • Class 4: payable once profits exceed the relevant threshold
  • Class 2: abolished (from April 2024)

Even though Class 2 has been abolished, many self-employed individuals will still build National Insurance credits automatically where profits are above the relevant level. Those with lower profits can usually choose to make voluntary contributions to help protect entitlement to certain state benefits, including the State Pension.

Employers – key 2025/26 NIC points

For employers, the 2025/26 tax year brings the following headline figures:

  • Employer (Class 1) NIC rate: 15%
  • Secondary Threshold: £5,000 per year (approximately £96/week or £417/month)
  • Class 1A / Class 1B rate: 15% on most taxable benefits and expenses (and PAYE Settlement Agreements)
  • Employment Allowance: increased to £10,500 for eligible employers

In simple terms, employers generally start paying NICs once an employee’s earnings exceed the Secondary Threshold, and the Employment Allowance can reduce employer NICs for businesses that qualify.

Are there any exceptions?

Yes. Lower (or nil) employer NIC rates can apply in certain cases, for example for:

  • employees under 21
  • apprentices under 25
  • qualifying veterans (for a set period)

Company directors

Directors’ National Insurance is typically calculated on an annual earnings basis. Because salary, dividends, employer NICs and wider tax rules interact, it is often sensible for directors to review remuneration strategy periodically—particularly where employer NIC costs are rising.

Rates and thresholds are correct for the 2025/26 tax year and may change in future Budgets.

Reference: GOV.UK guidance on National Insurance rates and thresholds for employers.