Class 1 National Insurance Contributions Explained

Class 1 national insurance contributions are the deductions taken from your wages when you work as an employee. You pay the employee share, known as the primary contribution, and your employer pays a separate secondary contribution on top of it. For 2026/27 the employee rate is 8% on weekly earnings between £242 and £967, and 2% on anything above that.

Here is the bit that catches people out. You can go a whole year without paying a penny of national insurance and still earn a qualifying year towards your state pension.

Earnings sitting between the lower earnings limit and the primary threshold are charged at 0%, yet HMRC treats them as contributions made. Paying nothing and getting nothing are not the same thing.

Class 1 NICs apply to PAYE income only, so salary, bonuses and overtime count while dividends, savings interest and rental profits do not. Your employer works the deduction out and sends it to HMRC alongside your income tax.

Who pays class 1 national insurance contributions

If you are an employee earning above the primary threshold, class 1 national insurance comes out of your pay automatically. There is no form to complete and no decision to make.

Two separate payments sit behind the single line on your payslip. The part deducted from your wages is the primary contribution, better known as employee national insurance contributions. The part your employer adds is the secondary contribution, or employer national insurance contributions, and it never shows as a deduction because it was never your money in the first place.

The charge only covers national insurance on PAYE income: salary, bonuses, overtime, commission and statutory pay.

Anything outside payroll sits outside class 1 altogether. Dividends, savings interest, pension income and profits from property are not caught, which is why two people on the same total income can pay very different amounts.

Class 1 national insurance rates

Class 1 national insurance rates are set by HMRC and applied by your employer at each payday. What you pay depends on where your earnings fall between the thresholds, not on what you earned earlier in the year.

The figures below follow HMRC’s published rates and thresholds for 2026/27.

Class 1 national insurance weekly rates for 2026/27 break down like this:

• Nothing on the first £129 a week, because earnings below the lower earnings limit sit outside the system entirely.
• Nothing from £129 up to £242 a week, charged at 0% but still counting towards your record.
• 8% on earnings above £242 and up to £967 a week.
• 2% on everything above £967 a week.

Class 1 national insurance monthly rates follow the same pattern on different figures:

• Nothing on the first £559 a month.
• Nothing from £559 up to £1,048 a month, again at 0%.
• 8% above £1,048 and up to £4,189 a month.
• 2% on anything above £4,189 a month.

It is the obvious question: how much class 1 national insurance do I pay on a typical salary? Take £30,000 paid in equal instalments across the year.

Knock off the £12,570 primary threshold, leaving £17,430, and 8% of that is £1,394.40 for the year, or roughly £116 a month. Pay that arrives unevenly gives a different answer, for the reason below.

One quirk can trip people up. Class 1 NIC rates are applied separately to each pay period, so a bonus month can push you into the 2% band for that month alone with nothing smoothed out afterwards.

Income tax under PAYE works cumulatively across the year. National insurance does not.

Where the class 1 thresholds start and stop

Three class 1 thresholds decide what leaves your pay. HMRC publishes each as a weekly, monthly and annual figure, and payroll uses whichever matches how often you are paid.

The figures for 2026/27 are:

• Lower earnings limit: £129 a week, £559 a month or £6,708 a year. Below this nothing is paid and nothing is recorded.
• Primary threshold: £242 a week, £1,048 a month or £12,570 a year. This is where deductions actually start.
• Upper earnings limit: £967 a week, £4,189 a month or £50,270 a year. Above this the employee rate drops to 2%.

Primary threshold national insurance deductions start the moment your pay crosses that middle figure, and only the part above it is charged. Those weekly and monthly figures are HMRC’s own and they are rounded, so multiplying the weekly figure by 52 will not give you the annual one.

Use whichever matches your pay frequency rather than working it out yourself.

The stretch between the lower earnings limit and the primary threshold is the part worth understanding.

Nothing leaves your pay, but the year still counts towards your record. Someone working part time on £200 a week pays no national insurance at all and still builds entitlement.

Apprentices, employees under 21 and veterans are handled through a different route, using national insurance category letters rather than different thresholds for you. The FAQs below explain what those letters do.

What your employer pays on top

Your employer’s contribution is a business cost rather than a deduction from you, though it shapes hiring and pay decisions in ways employees rarely see.

Secondary threshold national insurance is your employer’s charge alone, and it starts a long way below the point where your own deductions begin. Employers class 1 national insurance runs at 15% on earnings above £5,000 a year, which works out at £96 a week or £417 a month. There is no upper limit, so unlike your own contributions the employer charge never drops to 2%.

That rate is recent. The 13.8% employers national insurance rate applied until 5 April 2025, alongside a secondary threshold of £9,100, so employer costs rose on both counts from April 2025.

Two further charges sit alongside it, and both fall on employers only:

• Class 1A national insurance applies to most P11D benefits, such as a company car or private medical cover, at the same 15% rate.
• Class 1B national insurance covers items inside a PAYE settlement agreement, where an employer settles the tax and contributions on small or irregular expenses in one annual payment.

Benefits in kind national insurance is charged to the employer rather than to you, which is why a company car costs you income tax but no class 1 NIC.

Class 1A NIC on termination awards works differently again: it applies to the part of a termination payment above £30,000 and is reported through payroll during the year. Class 1A on ordinary P11D benefits is reported by 6 July after the tax year ends, with payment due by 22 July where it is made electronically.

How class 1 builds your national insurance record

Every week you earn at or above the lower earnings limit adds to your national insurance record, whether or not money actually changed hands.

Collect enough of those weeks and the year becomes one of your state pension qualifying years. GOV.UK sets out which benefits contributions count towards, and the state pension is the one most of this matters for.

National insurance credits do the same job when you are not working. They are awarded in situations such as claiming certain benefits, caring for a child or being unable to work through illness, and they protect the record without any payment being made.

Check your national insurance record for gaps

Errors happen, and a year that felt like a full working year can still show up as incomplete.

Your record can be viewed through the HMRC personal tax account on GOV.UK or in the free HMRC app, using a Government Gateway account or GOV.UK One Login. The GOV.UK check national insurance record page lists each tax year and marks it either full or not full.

If the online service is not an option, a national insurance statement can be requested by post from HMRC’s National Insurance Contributions Office at BX9 1AN. Statements cannot be requested for the current or previous tax year.

Gaps in national insurance record history are normally filled with class 3 voluntary contributions. Voluntary national insurance contributions can usually be paid for the previous six tax years. A wider window that once reached as far as 2006/07 ended on 5 April 2025.

The rules for paying voluntary contributions covering time spent abroad changed from 6 April 2026, so anyone with an overseas gap should check the current position rather than assume an old year can still be bought. Filling a gap does not always increase a state pension either, particularly for anyone who was contracted out, so a state pension forecast is the sensible first stop.

Check your class 1 national insurance contributions

Class 1 national insurance contributions are simple enough once the shape is clear. You pay 8% between the primary threshold and the upper earnings limit, 2% above it and nothing below.

Your employer pays its own secondary contribution at 15%, on a much lower threshold and with no ceiling. The earnings between the lower earnings limit and the primary threshold cost you nothing and still count towards your record.

The figures move most tax years, so the practical next step is to hold your payslip against the thresholds and then look at your own record on GOV.UK.

If a letter about overpaid contributions turns up, the national insurance refund letter guide explains what HMRC’s correspondence actually means.

Key Takeaways

Your class 1 NIC position comes down to a handful of points:

• Class 1 national insurance contributions apply to PAYE earnings only, so salary and bonuses are caught while dividends and rental income are not.
• For 2026/27 employees pay 8% on earnings above £242 and up to £967 a week, then 2% above that, with nothing due below £242.
• Earnings between the lower earnings limit of £129 a week and the primary threshold of £242 count towards your record at a 0% rate.
• Employers pay a separate secondary contribution at 15% on earnings above £5,000 a year, with no upper limit on the charge.
• Class 1 is calculated separately for each pay period, unlike income tax, so a bonus month is not evened out later in the year.
• Gaps can usually be filled with voluntary contributions going back six tax years, and records can be checked free of charge on GOV.UK.

Common class 1 national insurance contributions questions

The questions below cover situations the sections above do not, and GOV.UK publishes detailed guidance on each of them.

What happens to class 1 national insurance if you have two jobs?

Each employer runs the calculation on its own, applying the full primary threshold to the pay from that job alone. Two jobs paying £25,000 each are treated as two separate £25,000 employments rather than one £50,000 one.

That can work for you or against you. Where both jobs pay well above the upper earnings limit, you can end up paying the 8% main rate twice on earnings that would have attracted only 2% in a single job.

HMRC allows deferment in that situation. Form CA72A applies for one tax year at a time, and where it is granted your second employer drops you to the 2% rate on everything you earn over the primary threshold, rather than the main 8%. Applications covering 2026/27 are due by 14 February 2027.

Deferment has to be arranged in advance. Where the tax year has already ended and too much was deducted, the position is different and a claim is made to HMRC instead: how to claim a national insurance refund sets out the routes for each class.

Do you still pay class 1 national insurance after state pension age?

No. Once you reach state pension age you stop paying employee contributions, even if you carry on working. Your employer should move you to national insurance category letter C.

Your employer does not stop. Secondary contributions continue at 15% on earnings above the secondary threshold for as long as you are employed, so the cost to the business is unchanged by your age.

If deductions carry on after they should have stopped, the overpayment can be reclaimed from HMRC.

What does the national insurance category letter on your payslip mean?

The category letter tells payroll which set of rates and thresholds to apply. Most employees sit on letter A, the standard category, which carries the 8% and 2% employee rates and the full 15% employer charge.

Other letters cover specific groups. Letter H is for apprentices under 25, letter M for employees under 21 and letter V for veterans in their first year of civilian employment. In each case you still pay the standard employee rate, but your employer pays nothing until your earnings reach £967 a week.

Letters J, L and Z cover deferment arrangements for anyone with more than one job, and letter B still exists for the small number of married women and widows on the reduced rate, who pay 1.85% rather than 8%. The letter sits next to the national insurance line on your payslip, so it is easy to check against the category you expect.

Do you pay class 1 if you are employed and self employed?

Yes, on the employed side. Employed and self employed national insurance run on separate tracks: class 1 is charged on the PAYE earnings from your employment, and self-employed profits are dealt with separately.

Class 4 national insurance is charged on self-employed profits through self assessment. Class 2 national insurance changed in April 2024. Self-employed people are no longer liable for it, and anyone whose profits reach the small profits threshold is treated as having paid it, so the year still counts towards their record. Anyone earning below that point can still pay class 2 voluntarily.

Paying into more than one class in the same year can mean paying more than was actually due, because each class is worked out on its own. Where earnings are high on both sides, the position is worth checking once the tax year has ended.

What happens if class 1 contributions are missing from your record?

A tax year showing as not full when you were employed and earning above the lower earnings limit usually points to a reporting problem rather than a genuine gap in contributions.

Start with your own paperwork. P60s and payslips for the year in question show what was deducted, and HMRC’s record should match them. Where the two disagree, the discrepancy is worth raising directly with HMRC’s National Insurance Contributions Office.

That is a different situation from a year in which no contributions were due at all. A genuine gap is filled with voluntary contributions; a reporting error is corrected, and no payment should be needed.