PLEASE NOTE: The charity TaxAid advises only those people on low incomes whose problems cannot be resolved with HMRC.

National Insurance Thresholds

National insurance for employees and employers

The amount of National Insurance you pay depends on how much you are paid each payday. This is different from income tax. Income tax uses an annual limit for each tax year. For National Insurance, your pay is compared to a number of different ‘limits’ to see how much National Insurance you pay. If you are normally paid weekly, then a weekly limit is used. If you are normally paid monthly, then a monthly limit is used. For simplicity, we use weekly limits in our examples. The main limits are:

a)    The Lower Earning Limit (or LEL)

If you earn between the Lower Earning Limit and the Primary Threshold you will get National Insurance ‘credits’ – that is you will be entitled to some basic National Insurance benefits, but won’t actually pay any National Insurance. These limits are respectively £113 and £157 per week for 2017/18.

Example:  During 2017/18, Lottie earns £96 per week in one job and £115 per week in a second job. Neither Lottie nor her employers pay National Insurance. But because her earnings are over £113 per week in the second job, Lottie will gain basic state benefit rights from this second job.

b)    The Primary Threshold (sometimes called the Primary Earnings Threshold)

If you earn between the Primary Threshold and the Upper Earnings Limit, then you will pay the standard rate of National Insurance (12% in 2017/18) on your earnings over the Primary Threshold. The Primary Threshold is £157 per week in 2017/18. The Upper Earning Limit is £866 per week for 2017/18.

Example: John earns £200 in one week in July 2017. He pays no National Insurance on the first £157 and 12% on the next £43.  (That is £5.16).

c)    The Secondary Threshold (sometimes called the Secondary Earnings Threshold)

If you earn over the Secondary Earnings Threshold then your Employer will pay the standard rate of employer’s National Insurance on these earnings (13.8% in 2017/18). This limit is £157 per week in 2017/18. This is in addition to the employee’s contributions (which are due on earnings over the Primary Threshold of £157 per week).

Example: John earns £200 in one week in July 2017. He pays £5.16 in National Insurance on his earnings over £157 (as above). His Employer also pays 13.8% on the earnings over £157 per week, that is on £43 – a sum of £5.93.

d)    The Upper Earnings Limit (or UEL)

(£866 per week for 2017/18). For high earners who are paid over the Upper Earnings Limit, the National Insurance rate falls. On earnings above this limit, the employee pays a lower rate of 2% in 2017/18. The Employer continues to pay the standard rate of employer’s National Insurance (13.8%) on these earnings.

e)    Lower Earnings Limit

If your earnings in any job are less than the Lower Earnings Limit (£113 per week for 2017/18), then you will pay no National Insurance and you will earn no National Insurance benefit rights.

TaxAid Tip

As state pension age rises, check your employer knows the right date to stop your National Insurance deductions.