Guide
PAYE vs NI: Thresholds Explained (2026/27)
A payslip can look odd simply because tax and National Insurance are not meant to line up exactly.
Quick answer
PAYE income tax and employee National Insurance are separate deductions with separate rules. In 2026/27 the main annual starting points line up at £12,570 for many employees, but the way each system works after that is still different, so the deduction pattern often diverges.
On this page
Why they are separate in the first place
PAYE income tax and National Insurance are different deductions collected through the same payroll. They are not two names for the same thing.
That means they have different starting points, different bands, and different correction rules. A neat-looking salary does not force the tax and NI lines to match each other.
The key 2026/27 numbers
| Period | Standard PAYE starting point, HMRC headline | Employee NI primary threshold | NI upper earnings limit |
|---|---|---|---|
| Weekly | £242 | £242 | £967 |
| Monthly | £1,048 | £1,048 | £4,189 |
| Annual | £12,570 | £12,570 | £50,270 |
The headline starting points align for a standard employee, but PAYE uses the code's allowances, bands and cumulative/non-cumulative basis. NI normally uses that payment's earnings period. Do not reconstruct exact PAYE pennies solely from this rounded summary. Directors and other NI categories need their own rules.
How the rates differ after the threshold
Income tax steps through the income tax bands for your region. Employee NI uses an 8% main rate up to the upper earnings limit and 2% above that in 2026/27 for category A employees.
That is why NI can flatten out at higher salaries even while income tax keeps rising.
Why pay frequency can make the lines look odd
PAYE is usually cumulative across the year when the code is normal. National Insurance is usually worked out per pay period. So a bonus month can distort the relationship between the two lines even when payroll is doing exactly the right thing.
This is one of the most common reasons people think a payslip is wrong when it is really just two different systems behaving as designed.
Break the payslip into separate systems
If one line looks odd, test tax and NI separately instead of assuming one should explain the other.
When a mismatch really is a warning sign
You should worry more when the mismatch comes with another obvious clue, such as BR, D0, M1, W1, or a deduction line that changed the taxable gross pay unexpectedly. Without those clues, a simple PAYE-versus-NI difference is often normal.
The right approach is to test each line against its own rules rather than expecting them to mirror one another.
What to check
- PAYE is about income tax, not NI.
- NI is calculated under different thresholds and bands.
- A payslip can have tax but little NI, or NI but little tax, depending on the situation.
What to do next
- Look at the tax and NI lines separately instead of assuming one explains the other.
- Use the calculator if you want to see where the NI rate drops at higher pay.
- Use the checker if one line looks odd but the other looks normal.
Try the tool
Check your payslip or model a change.
Use the checker if you already have a payslip. Use the calculator if you want to model take-home pay or salary-sacrifice changes before payday.
About this guide
Published by IsMyPayRight to help you understand pay and deductions. Guides use official reference material and practical examples, with AI assistance in content preparation.
This is general guidance, not a professional review of your circumstances. Read our editorial process and corrections information.
Methodology and sources
See how the calculations work, which sources they use, how results are tested, and which payroll details the estimates cannot verify.
Common questions
- Are PAYE and National Insurance the same deduction?
- No. PAYE is the system for collecting income tax, while National Insurance is a separate deduction with its own rules.
- Why can NI drop to a lower rate while tax stays high?
- Because employee NI uses its own upper-earnings-limit rule, while income tax keeps following income-tax bands.
- Can PAYE and NI look odd in a bonus month even if payroll is right?
- Yes. PAYE and NI do not always react to one-off pay in the same way.
Official sources
Official sources
Use these references to check the rules behind this guide. Check the tax year and your circumstances before applying an example to your own pay.