What Is National Insurance and Why Do You Pay It?

National Insurance is a tax on your earnings that builds your entitlement to the state pension and certain benefits. Employees pay 8% on income above £12,570 a year, deducted automatically from your pay alongside income tax.

Last reviewed: 30 May 2026 · 2 min read

Key Facts

Employees pay 8% NI on earnings above £12,570 a year
It counts towards your state pension and some benefits
You need a National Insurance number to work in the UK

What NI is and what it funds

National Insurance is a separate tax from income tax, but it works similarly — it's deducted from your pay through PAYE. The main employee rate is 8% on earnings above £12,570 a year, with a lower 2% on very high earnings.

Unlike income tax, NI builds your record towards the state pension and benefits like contributory Jobseeker's Allowance. You generally need 35 qualifying years to get the full state pension, so the years you pay in matter.

Your NI number and record

Everyone working in the UK needs a National Insurance number — a unique reference that tracks your contributions. You usually get one automatically before turning 16, and you'll need it for any job.

You can check your NI record through your personal tax account on gov.uk to see how many qualifying years you have. Gaps can sometimes be filled with voluntary contributions, though that's rarely a priority when you're young.

FAQ

Frequently Asked Questions

Do I pay National Insurance on a low income? +

Only on earnings above £12,570 a year. If you earn below that, you pay no National Insurance. Earning between the lower earnings limit and that threshold can still build qualifying years towards your state pension without you paying anything, which is a quiet benefit of being in work.

Is National Insurance the same as income tax? +

No, they're separate. Income tax funds general government spending, while National Insurance specifically builds your entitlement to the state pension and certain benefits. They have different thresholds and rates, though both are deducted from your pay automatically through PAYE.

What happens if I have gaps in my National Insurance record? +

Gaps can reduce your state pension if you end up with fewer than 35 qualifying years by retirement. You can check your record on gov.uk and, in some cases, pay voluntary contributions to fill gaps. For most young workers this isn't urgent, but it's useful to know your record exists.

Topics covered

tax national insurance first job

This article is for informational purposes only and does not constitute financial advice. Always do your own research or speak to a qualified financial adviser before making financial decisions.