Key Stage: KS3
Year group: Year 8
Age range: 12–13
Duration: 50 minutes
Subject: Maths / PSHE / Citizenship
Cost: Free

Learning aim

Pupils can explain what National Insurance is, how it differs from income tax, and what services it specifically funds (State Pension, NHS, key benefits).

CURRICULUM National Curriculum links

PSHE Association KS3 L24: about the role of money in their lives
Citizenship KS3: how government raises money for public services
Citizenship KS3: the role of the welfare state and the NHS
Maths KS3: percentage calculations in financial contexts

RESOURCES What you'll need

Sample payslip with NI line highlighted
"NI vs Income Tax" comparison handout
NHS / State Pension infographic
NI bands 2026/27 visual
Worksheet + calculators

LESSON Lesson structure (50 minutes)

Opening
HOOK

Display a payslip with both "Income Tax" and "National Insurance" deduction lines. Ask: "Why are there TWO deductions? Aren't they the same thing?" Take 2-3 quick answers. Most pupils think they're the same. Reveal: they're collected together but pay for different things — and that matters.

Direct teach
TEACH

Define NI: "a separate type of tax that pays specifically for the State Pension, the NHS, and government benefits like unemployment pay and Statutory Sick Pay." Compare side by side on the board: Income Tax → general government spending (schools, roads, defence, libraries). NI → specifically funds social insurance (State Pension, NHS, unemployment/sickness benefits). Show 2026/27 NI rates for employees: £0-£12,570 = 0%, £12,571-£50,270 = 8% (main rate), £50,271+ = 2% (lower rate above upper earnings limit). Note: the rate DROPS above £50,270 — a deliberate but controversial design.

Pupils apply
GUIDED

Work through a calculation on the board: "If you earn £30,000, how much NI do you pay?" First £12,570 = £0 NI. Remaining £17,430 × 8% = £1,394.40. Total NI: £1,394.40. Pupils calculate NI for £20,000, £40,000, and £55,000 in pairs. For each, also calculate the income tax (using the previous lesson) and find the TOTAL deduction. Discuss: how much of every pound does someone on £40k take home?

Stretch / depth
CHALLENGE

Discuss in pairs: "Why does NI fund only the State Pension and NHS — not schools or defence?" Build the historical answer: NI was introduced in 1911 as "social insurance" — you pay in while working, and you draw out when sick, unemployed, or old. Different philosophy from general tax. Then: "Do you think this is a fair system? Should ALL tax be like this, or none of it?" Allow disagreement — this is a Citizenship question, not a maths one.

Close
PLENARY

Each pupil writes: "NI is different from income tax because ___." Share three. Final question: "What's the minimum annual salary before you start paying NI?" (£12,570 — same threshold as income tax.)

DIFFERENTIATION Adapting for all learners

Support (working below ARE)

Use round-number salaries (£15k, £25k). Provide a calculator and a pre-printed NI band table. Focus on understanding what NI funds rather than calculation speed.

Stretch (working above ARE)

Calculate NI for someone earning £60,000 (which crosses into the 2% above-upper-earnings-limit band). Explain why the rate DROPS above £50,270 — and why some argue this is regressive. Connect to the Citizenship discussion.

SEND SEND adaptations

For pupils with dyscalculia: use the same band-calculation template as the income tax lesson (familiar structure). For pupils with autism: provide a clear written definition "NI = a tax that funds State Pension, NHS, and benefits." For pupils with EAL or limited literacy: use the infographic-heavy approach.

EAL EAL support

Vocabulary: "National Insurance", "social insurance", "State Pension", "NHS", "benefits", "Statutory Sick Pay". Sentence frame: "NI pays for ___. It is different from income tax because ___."

ASSESSMENT Assessment criteria

Pupils can: (1) define NI in their own words; (2) calculate NI deduction on a £25,000 income; (3) name three things NI specifically funds; (4) explain one key difference between NI and income tax.

HOME Homework pack

Four activities to consolidate understanding of National Insurance. ~30 minutes.

Class 1 calculation

What pupils do: A worker earns £30,000 per year. Calculate their employee Class 1 NI (8% on income £12,570–£50,270). Show working.

Expected output: Step-by-step calculation.

Marking guidance: 2 marks for correct slice (£17,430), 2 marks for correct 8% calculation (£1,394.40). 4 marks total.

NI vs Income Tax

What pupils do: Write 3 differences between Income Tax and National Insurance. Cover: (a) what they pay for, (b) the rates, (c) who pays.

Expected output: A 3-difference table or paragraph.

Marking guidance: 2 marks per accurate difference. 6 marks total.

State Pension link

What pupils do: How many qualifying years of NI do you need for a FULL new State Pension? How much is the full new State Pension per week in 2026/27?

Expected output: A 2-sentence answer.

Marking guidance: 2 marks for "35 years", 2 marks for "£241.30/week".

Extension (optional)

What pupils do: A self-employed earner makes £25,000 profit. Calculate their Class 4 NI (6% on profits £12,570–£50,270 in 2026/27). How does this compare to an employee earning the same £25,000?

Expected output: Two NI calculations plus a 2-sentence comparison.

Marking guidance: Up to 6 marks for accurate calculations and a thoughtful comparison.

Family discussion prompt (safeguarding-aware)

Ask a working adult: "Did you know how much National Insurance you pay each month? Why do you think most people don't know?"

SAFEGUARDING Classroom safeguarding

Note for teachers: Do not ask pupils about their family's pension, NI status, or benefits received. Use fictional salaries throughout. Be aware some families may receive benefits — discuss the topic without singling anyone out.

ANSWERS Answer key & differentiation

Answer guide

Guided NI (employee, 2026/27 bands): £20,000 → £7,430 × 8% = £594.40; £30,000 → £1,394.40 (modelled); £40,000 → £27,430 × 8% = £2,194.40; £55,000 → £37,700 × 8% + £4,730 × 2% = £3,110.60.
Take-home check on £40,000: income tax £5,486 + NI £2,194.40 leaves £32,319.60 — roughly 81p kept of each £1.
Plenary: NI starts above £12,570 a year (about £1,048 a month) — the same threshold as income tax.
Homework "State Pension link": 35 qualifying years; the full new State Pension is £241.30 a week in 2026/27 — use this figure and update any older printed amount.
Extension: Class 4 on £25,000 profit = £12,430 × 6% = £745.80 vs employee Class 1 £994.40 — the self-employed earner pays £248.60 less NI on the same income.

Support (scaffold)

Reuse the two-row band template from the income-tax lesson: row 1 "first £12,570 × 0%", row 2 "the rest × 8%".
Fix the calculator routine: subtract 12,570 first, write the slice down, then multiply — never one combined step.
Sorting cards: pupils place State Pension, NHS, schools, defence, sick pay under "NI" or "general taxation" before any arithmetic.

Stretch (challenge)

Compute effective NI rates: £594.40 ÷ £20,000 ≈ 3%; £3,110.60 ÷ £55,000 ≈ 5.7% — why are both far below the 8% headline?
Debate the 2% upper band with evidence: is a rate that falls above £50,270 regressive, or fair given NI's insurance origins?
Transfer: which of a payslip's two deductions would fund a new hospital wing, and which a new motorway? Justify from the lesson's definitions.

What is income tax — and why we pay it (KS3 · Year 7 / Year 8)
Understanding your first payslip (KS3 · Year 7 / Year 8)
Tax codes and emergency tax — decoding the letters and numbers (KS3 · Year 8 / Year 9)
All lesson plans (KS1 · KS2 · KS3 · KS4) →