Your payslip shows a National Insurance category letter. It tells payroll which set of rates applies to you, and while most people are on category A, being on the wrong one costs real money.
3 bands above the personal allowance. Each bar starts where that rate begins.
The standard rates
For 2026/27, an employee on category A pays:
| Earnings | Employee rate |
|---|---|
| Up to £12,570 (primary threshold) | 0% |
| £12,570 to £50,270 (upper earnings limit) | 8% |
| Above £50,270 | 2% |
Employers pay 15% on earnings above the £5,000 secondary threshold.
The 2% rate above the upper earnings limit surprises people. National Insurance is not progressive in the way income tax is — the marginal rate falls once you pass £50,270.
The main category letters
| Letter | Who it applies to |
|---|---|
| A | Most employees — the default |
| B | Married women and widows with a valid reduced-rate election |
| C | Employees over State Pension age |
| H | Apprentices under 25 |
| M | Employees under 21 |
| V | Qualifying veterans in their first year of civilian employment |
| F, I, S, L | Employees at freeport sites |
| X | Employees who pay no National Insurance, such as those under 16 |
Categories H, M and V mainly reduce the employer’s bill rather than yours — the employer pays a lower rate up to a higher threshold. Your own deduction is generally unaffected, so these are relevant to your employer’s costs rather than your take-home.
Category C is the one that matters most to you directly. Once you reach State Pension age you stop paying employee National Insurance entirely, though your employer continues to pay theirs. If you have passed State Pension age and your payslip still shows category A, you are paying National Insurance you do not owe.
Category B is a historical relic. The reduced-rate election closed to new applicants in 1977, so it now applies only to a small and shrinking group.
Why deductions are worked out per pay period
National Insurance is calculated on each pay period in isolation, not cumulatively across the year like income tax.
The monthly thresholds are the annual figures divided by 12: £1,047.50 for the primary threshold and £4,189.17 for the upper earnings limit.
This produces a result that looks wrong but is not. Someone earning £30,000 evenly across the year pays a predictable amount. Someone earning the same £30,000 with a large bonus in one month pays more National Insurance overall, because the bonus month pushes earnings above the upper earnings limit where only 2% applies, while other months fall below the primary threshold where nothing accrues.
Unlike income tax, this is not corrected at the end of the year. Irregular earnings genuinely cost more in National Insurance than the same total paid evenly.
This is also the main reason our take-home pay calculator may differ slightly from your payslip. We calculate on an annual basis; payroll calculates per period.
Directors are different
Company directors have National Insurance worked out on an annual basis rather than per pay period, using an annual earnings period.
The effect is that a director pays nothing until cumulative earnings pass the annual primary threshold, then 8% until the annual upper earnings limit, then 2%. Deductions can therefore be zero for several months and then large.
Some payroll systems apply an alternative method during the year and reconcile in the final period. Either is acceptable provided the year-end total is right.
Checking your category
Your category letter is on your payslip near the National Insurance figure.
Ask your employer to change it if:
- You have reached State Pension age but are still on A
- You are under 21 and on A rather than M
- You are an apprentice under 25 and on A rather than H
- You are a veteran in your first year of civilian employment and on A rather than V
For the last three the saving belongs to your employer, but they will still want it corrected.
If you have overpaid because you were on the wrong letter, contact HMRC. Overpaid National Insurance can usually be refunded, though the process is slower than an income tax refund.
Multiple jobs
Each job calculates National Insurance separately against the full thresholds. Two jobs paying £15,000 each means both apply the £12,570 primary threshold, so you pay 8% on only £2,430 in each — considerably less than the £17,430 you would pay on in a single £30,000 job.
Unlike income tax, this is not corrected afterwards. It is a genuine quirk of the system rather than something you need to declare.
There is a ceiling: if you pay National Insurance in multiple jobs and your total exceeds the annual maximum, you can apply to HMRC for a refund or for deferment.
Sources
- National Insurance rates and categories — GOV.UK
- Rates and thresholds for employers 2026 to 2027 — GOV.UK
- National Insurance — GOV.UK
Checked against source on 30 August 2026. This is general guidance, not tax advice.
Written by Nathan Cole
I built the calculators on HoursHQ and check every statutory figure against GOV.UK, Acas and the legislation itself before it goes live. Where the law is genuinely unclear, I say so rather than guessing.