Upper Earnings Limit (UEL)

The Upper Earnings Limit (UEL) is the threshold above which employee Class 1 National Insurance switches from the main rate to the additional rate. For 2026/27 the UEL is £967 per week, £4,189 per month, or £50,270 per year - deliberately aligned with the income-tax higher-rate threshold.

Between the Primary Threshold and the UEL, employees pay 8% NI. Above the UEL, the rate drops to 2% and stays there however much extra is earned. The UEL therefore creates a small NI 'cliff' where additional earnings save 6 percentage points relative to mid-band pay. Employer NI, by contrast, has no UEL - it is charged at 15% on all earnings above the Secondary Threshold.

Worked example: Sienna earns a basic salary of £52,000 plus a £30,000 bonus. The first £12,570 (PT) is NI-free; the next £37,700 (PT to UEL) is taxed at 8% = £3,016; the remaining £31,730 above the UEL is taxed at 2% = £635. Total employee NI for the year is £3,651. If her bonus had instead been £100,000, almost all of it would be taxed at 2%, so her marginal NI cost above the UEL is six times lower than below it. Salary-sacrifice arrangements that take pay below the UEL save the full 8%, which is why pension salary sacrifice is much more efficient for mid-earners than for those well above the UEL.