Upper Earnings Limit
The earnings level above which employees pay a lower rate of Class 1 National Insurance, currently set at £50,270 — aligned with the higher-rate income tax threshold. Below this limit employees pay 8% NI; above it the rate drops to just 2%. The alignment with the higher-rate threshold means that moving into the higher-rate band often coincides with the drop in NI rate, slightly offsetting the increase in income tax.
Related Terms
Class 1 National Insurance
National Insurance contributions paid by employees and employers on earnings above the Primary Threshold.
National Insurance
A system of compulsory contributions paid by employees, employers, and the self-employed that funds state benefits including the State Pension, Statutory Sick Pay, and Maternity Pay.
Primary Threshold
The level of earnings above which employees start paying Class 1 National Insurance contributions, set at £12,570 per year (£242 per week) for 2025/26.
Higher Rate
The income tax rate of 40% applied to taxable income above £50,270 up to £125,140 in England, Wales, and Northern Ireland.
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