UK Employer NI Rates and Thresholds
The employer National Insurance rate is 15% on all earnings above £5,000 per year, a rate that has applied from 6 April 2026 and covers every UK employer paying wages through PAYE [1] [9]. Before that date, the standard rate was 13.8%, a level that had been in place since April 2011. The combination of a higher rate and a lower Secondary Threshold makes this the most consequential employer NI change in over a decade.
This article sets out the current rates, thresholds, NI category letters and Employment Allowance figures in a single reference. Every figure comes from HMRC's published rates for the 2026-27 tax year.
Key takeaways
- Standard employer NI rate: 15% on earnings above £5,000 per year [1].
- Secondary Threshold: £5,000 per year (£417/month, £96/week) [2].
- Zero employer NI for under-21s and apprentices under 25, up to £50,270 per year [4].
- Employment Allowance: £10,500 per year for eligible employers [5].
- Class 1A rate on benefits in kind: 15% [2].
Employer NI rates at a glance
The table below summarises employer NI rates by NI category letter for the 2026-27 tax year. NI category letters are assigned per employee in the payroll record and determine both the employer-side and employee-side rates [1] [4].
| NI category | Employee type | Employer rate up to relief threshold | Above threshold |
|---|---|---|---|
| A | Standard | 15% from ST | 15% |
| B | Married woman reduced rate | 15% from ST | 15% |
| C | Over State Pension age | 15% from ST | 15% |
| J | Deferred NI | 15% from ST | 15% |
| H | Apprentice under 25 | **0%** up to AUST £50,270 | 15% |
| M | Under 21 | **0%** up to UST £50,270 | 15% |
| Z | Under 21, deferred | **0%** up to UST £50,270 | 15% |
| V | Armed forces veteran (first 12 months) | **0%** up to VUST £50,270 | 15% |
| F | Freeport, standard | **0%** up to FUST £25,000 | 15% |
| I | Freeport, married woman | **0%** up to FUST £25,000 | 15% |
| S | Freeport, over SPA | **0%** up to FUST £25,000 | 15% |
| L | Freeport, deferred | **0%** up to FUST £25,000 | 15% |
| N | Investment Zone, standard | **0%** up to IZUST £25,000 | 15% |
| E | Investment Zone, married woman | **0%** up to IZUST £25,000 | 15% |
| K | Investment Zone, over SPA | **0%** up to IZUST £25,000 | 15% |
| D | Investment Zone, deferred | **0%** up to IZUST £25,000 | 15% |
Freeport (F, I, S, L) and Investment Zone (N, E, K, D) are two separate government employer NIC relief schemes. Both relieve employer NIC to the same monetary threshold (£25,000 per year) but use distinct category letters that cannot be used interchangeably in RTI submissions.
Standard employer NI rate
Category A is the default for most employees. At 15%, the employer rate applies to all earnings above the Secondary Threshold of £5,000 per year, with no upper limit [1] [2]. Unlike the employee-side NIC, which drops to 2% above the Upper Earnings Limit, the employer rate holds at 15% on every pound of earnings above the Secondary Threshold.
Zero-rate employer NI categories
Categories H, M, Z and V carry a zero employer NIC rate up to the Upper Secondary Threshold (UST) of £50,270 per year [4]. Categories F, I, S and L (Freeport and Investment Zone employees) carry a zero rate up to the lower Freeport Upper Secondary Threshold (FUST) of £25,000 per year [10].
For veterans (category V), the zero rate is available for 12 consecutive months from the first day of first civilian employment after leaving the armed forces [11]. For Freeport workers, the relief runs for up to 36 months provided the employee spends at least 60% of working time in the special tax site [10].
These zero rates are only applied if the correct category letter is set in the employee's payroll record. Payroll bureaux managing multiple schemes can enforce consistent category-letter assignment through a multi-client payroll platform.
Employer NI thresholds 2026-27
All employer NI thresholds are frozen until 2030-31 [2]. The table below sets out the full schedule for the 2026-27 tax year, including the Lower Earnings Limit (LEL), which does not trigger NIC but must be recorded.
| Threshold | Weekly | 2-weekly | 4-weekly | Monthly | Annual |
|---|---|---|---|---|---|
| Secondary Threshold (ST): employer NIC starts | £96 | £193 | £385 | £417 | £5,000 |
| Lower Earnings Limit (LEL): record on payroll | £129 | £258 | £516 | £559 | £6,708 |
| Primary Threshold (PT): employee NIC starts | £242 | £484 | £967 | £1,048 | £12,570 |
| Freeport / IZ UST (FUST/IZUST): zero rate ends | £481 | £962 | £1,924 | £2,083 | £25,000 |
| Upper Secondary Threshold (UST/AUST/VUST) | £967 | £1,934 | £3,867 | £4,189 | £50,270 |
| Upper Earnings Limit (UEL) | £967 | £1,934 | £3,867 | £4,189 | £50,270 |
The UST, AUST, VUST and UEL share the same value for the 2026-27 tax year. 2-weekly and 4-weekly thresholds apply to employees paid on those cycles; the system uses the appropriate period threshold automatically rather than pro-rating between two monthly figures [8].
Note that the Secondary Threshold (£5,000) sits below the Lower Earnings Limit (£6,708). This is a deliberate asymmetry. A worker earning £5,500 per year crosses the ST and triggers employer NIC but has not yet reached the LEL. The employer pays NIC on that band; the employee pays nothing and the earnings do not yet contribute to a qualifying year for State Pension [8] [2].
Employment Allowance
Employment Allowance allows eligible employers to reduce their annual Class 1 employer NIC liability by up to £10,500 [5]. The allowance is applied incrementally each pay period through the payroll system, reducing the monthly payment to HMRC until the £10,500 is exhausted.
Most employers are eligible provided their Class 1 NIC liability in the previous tax year was below £100,000 [6] [5]. Connected companies in the same group share a single allowance; only one entity may claim it. Single-director companies where the director is the only employee with a secondary Class 1 NIC liability cannot claim [12].
The allowance is claimed by setting the correct indicator in the Employer Payment Summary. SME payroll software applies the allowance automatically once enabled in the employer record, without requiring a manual calculation each pay period.
Class 1A and Class 1B rates
Class 1A NIC applies to benefits in kind provided to employees and directors. The rate for the 2026-27 tax year is 15%, matching the standard secondary Class 1 rate [2]. Class 1B NIC is charged at 15% on items settled under a PAYE Settlement Agreement (PSA) [2].
The table below summarises all three Class 1 variants and their deadlines.
| Class | What it covers | Rate | Payment deadline |
|---|---|---|---|
| 1 (secondary) | Wages and salary above the ST | 15% | 22nd of month following pay period |
| 1A | Benefits in kind (P11D values), termination awards above £30,000 | 15% | 19 July following tax year end |
| 1B | PSA items | 15% | 19 October following tax year end |
Source: [2].
For developers building payroll integrations, Class 1A and Class 1B liabilities are distinct from the regular monthly PAYE payment and require separate handling in any year-end or settlement workflow.
Official worked examples
The HMRC NI guidance for software developers (v1.0, January 2026) includes 12 verified worked examples [1]. Two are particularly useful for understanding how the zero-rate categories work alongside the standard rate.
Category A (standard), weekly paid employee earning £1,000:
- ST to FUST (£96 to £481 weekly): £385 at 15% = £57.75 (unrounded)
- FUST to UEL (£481 to £967 weekly): £486 at 15% = £72.90 (unrounded)
- Combined before rounding: £57.75 plus £72.90 = £130.65
- Above UEL (£33): £33 at 15% = £4.95
- Total employer NIC: £135.60 [5].
Category H (apprentice under 25), weekly paid earning £250:
- ST to AUST: zero rate applies throughout (£0.00 employer NIC).
- Above UEL: not reached.
- Total employer NIC: £0.00 [4].
The contrast shows the practical value of the apprentice relief: an employer pays nothing on the £154 above ST on the same earnings that would generate £23.10 employer NIC under category A.
How employer NI rates have changed
The table below shows how the standard employer NI rate and Secondary Threshold have moved since the 2020-21 tax year.
| Tax year | Standard rate | Secondary Threshold (annual) |
|---|---|---|
| 2020-21 | 13.8% | £8,788 |
| 2021-22 | 13.8% | £8,840 |
| 2022-23 | 13.8% (briefly 15.05%, reversed mid-year) | £9,100 |
| 2023-24 | 13.8% | £9,100 |
| 2024-25 | 13.8% | £9,100 |
| 2025-26 | **15.0%** | **£5,000** |
| 2026-27 | **15.0%** | **£5,000** |
The changes that took effect from 6 April 2025, announced in the Autumn Budget on 30 October 2024, represent a double movement: the rate increased by 1.2 percentage points while the Secondary Threshold fell by £4,100. The net effect is a materially higher employer NI cost on virtually every payroll [9]. A full-time employee earning £25,000 per year generated approximately £2,193 of employer NIC in 2024-25 and generates approximately £3,000 from 2025-26, a difference of around £807 per employee per year.
Directors and employer NI
Directors are assessed on an annual earnings period rather than a weekly or monthly one [13]. The annual Secondary Threshold (£5,000) applies in full for the whole tax year regardless of when the director is appointed or how frequently they are paid, preventing manipulation of NIC liabilities by concentrating or deferring payments.
A director appointed mid-year uses pro-rated thresholds based on the number of weeks remaining. A director appointed with 20 weeks left in the tax year would have a pro-rata Secondary Threshold of approximately £1,923 (£5,000 divided by 52 multiplied by 20) [13] [8].
For accountants and payroll bureaux managing director-shareholder remuneration structures, correct annual-basis calculation is one of the most common areas of NIC error and the source of a significant proportion of payroll corrections.
Conclusion
The employer NI rate of 15% and the Secondary Threshold of £5,000 are the two figures that determine the base cost of employing anyone in the UK through PAYE. Together with the zero-rate categories, Employment Allowance, and the distinct Class 1A and 1B rates, they form the complete employer NI picture for 2026-27. These figures are reviewed each April; the employer NI explainer on the Moonworkers blog covers the practical mechanics of each element for employers who want to understand the calculation behind the numbers.
Frequently asked questions
What is the employer NI rate for the 2026-27 tax year?
The standard employer NI rate is 15% on all earnings above the Secondary Threshold of £5,000 per year [1]. The rate applies from 6 April 2026 and is unchanged from the previous tax year. Certain employee categories, including under-21s (category M), apprentices under 25 (category H), and armed forces veterans in their first year of civilian employment (category V), attract a zero employer NI rate up to £50,270 per year [4].
What was the employer NI rate before April 2025?
The standard employer NI rate was 13.8% from April 2011 until 5 April 2025, with a brief exception during the 2022-23 tax year when the Health and Social Care Levy temporarily raised it to 15.05% before being reversed mid-year [3]. The rate changed to 15% on 6 April 2025 alongside a reduction in the Secondary Threshold from £9,100 to £5,000 per year.
At what salary does an employer pay no National Insurance?
An employer pays no secondary Class 1 NIC for an employee whose earnings remain at or below the Secondary Threshold of £5,000 per year (£417 per month, £96 per week) [2]. Additionally, even above that threshold, employers of workers in categories M (under 21), H (apprentice under 25), and V (veteran) pay no employer NIC up to the Upper Secondary Threshold of £50,270 per year [4].
How do employer NI thresholds apply to weekly-paid employees?
Weekly-paid employees are assessed against the weekly thresholds. For 2026-27, the weekly Secondary Threshold is £96 and the weekly Upper Secondary Threshold is £967 [2]. If a weekly-paid employee earns £300 in a given week, employer NIC is calculated on £204 (£300 minus £96) at 15%, giving £30.60. HMRC's exact percentage method requires the period threshold to be applied in the pay period in which earnings arise, not on a cumulative year-to-date basis, except for directors who use the annual earnings period [8].
