National Insurance Rates and Thresholds for 2025/26

National Insurance (NI) is a key component of the UK's taxation system, contributing to the funding of social services, including the National Health Service (NHS) and welfare benefits.

As part of the UK government’s fiscal policy, National Insurance rates and thresholds are regularly reviewed and adjusted to ensure that they align with economic conditions and the country’s financial goals.

The upcoming tax year, 2025/26, brings several updates to both employee and employer National Insurance contributions. This article outlines the key changes, helping both employers and employees navigate their responsibilities and obligations under the new system.

Overview of Recent National Insurance Changes

National Insurance is primarily paid by individuals in employment and self-employment, as well as by employers on behalf of their employees. The rates and thresholds for National Insurance contributions (NICs) are adjusted annually to reflect changes in the economy, with the intention of balancing the government's fiscal needs while maintaining fairness in the tax burden on workers and businesses.

For the tax year 2025/26, several important changes have been introduced. One of the key adjustments is the increase in employer NICs, particularly the reduction in the secondary earnings threshold, meaning NI is due at a lower salary for employers, and changes to the rates for certain categories of employees. Additionally, the freeze on personal allowance thresholds and certain NIC thresholds will continue, which could have significant implications for workers as their wages rise in line with inflation.

These changes are part of the broader fiscal strategy aimed at securing the country's public finances and ensuring that the welfare system remains sustainable.

Employee National Insurance Rates

For the 2025/26 tax year, employees will continue to pay National Insurance based on their earnings. The rates differ depending on the earnings band, and employees are classified into different National Insurance categories based on their employment status and other factors.

Primary Threshold (PT):
Employees will begin paying National Insurance on earnings above £242 per week (£1,048 monthly or £12,570 annually). The contributions are calculated based on the amount of earnings above this threshold.
Contributions Rates:
0%: Earnings between the Lower Earnings Limit (LEL) and the Primary Earnings Threshold (PT).
8%: Earnings between the Primary Earnings Threshold (PT) and the Upper Earnings Limit (UEL).
2%: Earnings above the Upper Earnings Limit (UEL).

Example:
If an employee in category A earns £1,000 per week, they will pay:

£0 on the first £242.
8% on earnings between £242.01 and £967 (£58).
2% on the remaining £33 (£0.66).

In this case, the total National Insurance deduction would be £58.66 for the week.

Employer National Insurance Rates

Employers are responsible for paying National Insurance contributions on behalf of their employees. These contributions are calculated on the same thresholds as employee contributions, but the rates are slightly different.

Secondary Earnings Threshold (ST):
Employers begin paying National Insurance on earnings above £96 per week (£417 per month or £5,000 annually).
Employer Contribution Rates:
0%: Earnings between the Secondary Earnings Threshold (ST) and the Primary Earnings Threshold (PT).
15 %: Earnings above the Primary Earnings Threshold (PT), up to the Upper Earnings Limit (UEL).
15 %: Earnings above the Upper Earnings Limit (UEL).

Employers also have different rates depending on the employee's category. For example, employees under 21, apprentices under 25, and veterans may be eligible for different rates under specific conditions.

Class 1A and Class 1B Rates

Class 1A and Class 1B National Insurance contributions are paid by employers on certain benefits provided to employees. Class 1A applies to benefits such as company cars, and Class 1B applies to payments made under PAYE Settlement Agreements (PSAs), where employers pay the tax due on behalf of their employees.

Rates for 2025/26:

Both Class 1A and Class 1B contributions are 15% for the 2025/26 tax year. (P11d’s or P11db’s filed in July 2026.

Employers should ensure that these contributions are accounted for when providing employees with benefits in kind, as these payments also fall under the National Insurance system.

Employee Benefits and Expenses Also Subject to National Insurance

In addition to wages, many employee benefits, including company cars, private health insurance, and other perks, are also subject to National Insurance contributions. Employers must calculate the value of these benefits and ensure that the appropriate contributions are made.

Some expenses may also be subject to National Insurance. For example, payments for private use of a company vehicle or payments towards an employee’s personal mobile phone use can trigger additional National Insurance obligations.

Employers are required to report these benefits and expenses to HMRC, and they must ensure that the correct amount of Class 1A contributions is paid on them.

Conclusion

National Insurance is a critical aspect of the UK's social security system, and both employees and employers must remain aware of the rates and thresholds that apply to them. For the tax year 2025/26, changes in the thresholds and rates are important to consider when planning for payroll and tax obligations. Employers, in particular, should be aware of their responsibilities for paying employer contributions, as well as the additional obligations tied to employee benefits.

Staying informed about National Insurance rates and thresholds is essential for compliance and for understanding how the system impacts both employees' take-home pay and employers' financial responsibilities.

FAQs Around Employer National Insurance

What is the Employers NI Rate for 2025/26 tax year?

For the 2025/26 tax year, employers will pay 15 % on earnings above the Secondary Earnings Threshold of £96 per week. This rate applies to all employees who fall within the specified earnings bands.

What is the Employers National Insurance Allowance?

The Employment Allowance allows businesses to reduce their employer National Insurance contributions by up to £10,500. This allowance is available to most employers, with some exceptions, such as those where the director is the sole employee.

How to Calculate Employer NI?

To calculate employer National Insurance contributions, identify the employee’s earnings within each threshold band. Employers pay 0% on earnings between the Secondary Earnings Threshold and Primary Earnings Threshold, and 15 % on earnings above the Primary Earnings Threshold.

Do Employers Have to Pay Employees NI?

Employers are responsible for deducting employees’ National Insurance contributions from their wages and paying them to HMRC. In addition, employers are required to pay employer National Insurance contributions on their employees' earnings.

What Percentage is National Insurance?

For employees in category A, the National Insurance rate is 8% on earnings between £242.01 and £967 per week and 2% on earnings above £967. For employers, the rate is 15% on earnings above the Secondary Earnings Threshold.

This concludes our review of National Insurance rates and thresholds for 2025/26. It’s crucial for both employees and employers to stay informed about these rates to ensure compliance and proper financial planning.