Definition
The earnings level above which the rate of employee National Insurance contributions reduces from the main rate to a lower rate. It does not cap employer NIC, which continues at the full rate on all earnings above the Secondary Threshold.
UK Context
For 2025/26, the UEL is 50,270 pounds per year (967.12 pounds per week). Employees pay 8% NIC on earnings between the Primary Threshold and the UEL, and 2% on earnings above the UEL. The UEL is broadly aligned with the higher rate income tax threshold.
Best Practices
- Ensure payroll software correctly applies the reduced NIC rate above the UEL
- Be aware that employer NIC has no upper earnings limit and continues at 15% on all earnings
- Review UEL alignment with higher rate tax band when planning employee remuneration
Frequently Asked Questions
Does the Upper Earnings Limit cap National Insurance?
It caps the main employee rate but does not eliminate NIC entirely. Above the UEL, employees still pay 2% NIC. Employer NIC has no upper limit and continues at 15% on all earnings above the Secondary Threshold.
How does the UEL relate to income tax bands?
The UEL is broadly aligned with the higher rate income tax threshold. This means that when employees start paying higher rate income tax (40%), their employee NIC rate drops from 8% to 2%, partially offsetting the increased tax burden.