Definition
The earnings level above which employees must start paying their own National Insurance contributions. Earnings between the Lower Earnings Limit and the Primary Threshold count toward NI qualifying years but do not incur contributions.
UK Context
For 2025/26, the Primary Threshold is set at 12,570 pounds per year (242.30 pounds per week), aligned with the personal allowance for income tax. This alignment means employees begin paying both income tax and employee NICs at the same earnings level.
Best Practices
- Ensure payroll systems correctly apply the Primary Threshold for NIC calculations
- Inform employees that earnings between the Lower Earnings Limit and Primary Threshold still count toward their State Pension record
- Review threshold alignment with personal allowance when rates change
Frequently Asked Questions
Do employees pay NIC below the Primary Threshold?
No, employees do not pay NIC on earnings below the Primary Threshold. However, earnings above the Lower Earnings Limit (6,396 pounds per year for 2025/26) still count as qualifying earnings for State Pension purposes.
Why is the Primary Threshold aligned with the personal allowance?
The government aligned the Primary Threshold with the personal allowance to simplify the tax system. It means employees start paying both income tax and National Insurance at the same earnings level, making take-home pay calculations more straightforward.