UK Employer Cost Calculator 2026/27

The true cost of hiring an employee in 2026/27: employer NI at 15% above £5,000, auto-enrolment pension, Class 1A on benefits and Employment Allowance.

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The true cost of hiring a UK employee in 2026/27 - cash salary plus 15% employer Class 1 NI above the £5,000 Secondary Threshold, workplace pension (auto-enrolment minimum 3% of qualifying earnings), Class 1A NI at 15% on Benefits in Kind, and the £10,500 Employment Allowance for eligible employers. Rates from HMRC rates and thresholds for employers 2026 to 2027.

Worked scenarios for 2026/27

£25k entry-level: bare statutory

£28,563

Ratio 1.14x - NIC £3,000, pension £563
£45k: AE pension + medical

£53,888

Ratio 1.20x - NIC £6,000, pension £1,163
£65k mid-senior: 5% on-gross pension

£78,975

Ratio 1.22x - NIC £9,000, pension £3,250
£75k: 8% pension, medical + car (£2,000 taxable value)

£94,100

Ratio 1.25x - NIC £10,500, pension £6,000
£130k senior leader: full benefits

£165,225

Ratio 1.27x - NIC £18,750, pension £13,000
£35k small employer w/ Employment Allowance

£35,863

Ratio 1.02x - NIC £0, pension £863

What is the true cost of hiring a UK employee?

When a UK employer agrees a salary with a candidate, the headline number on the job spec is only the start. On top of it sit the employer’s share of National Insurance, the workplace pension contribution, the cost of any benefits and the Class 1A NI on them. That difference is what payroll teams call the on-cost or employer loading. With only employer NI and the auto-enrolment minimum pension, a £25,000 salary costs 1.14x and a £45,000 salary 1.16x in 2026/27.

This calculator models the statutory employer costs and the common voluntary ones for the 2026/27 tax year, using the rates HMRC publishes on gov.uk. Enter a gross salary and a few benefit choices and you see the total cost-to-employer, broken down by line.

Employer National Insurance: 15% above £5,000

The biggest single on-cost is Class 1 secondary National Insurance, paid by the employer on top of the cash salary. For 2026/27:

Rate: 15% (it was 13.8% in 2024/25).
Secondary Threshold: £5,000 a year (it was £9,100 in 2024/25).
No upper limit: unlike employee Class 1, employer NI applies to all salary above the threshold.

Both changes took effect on 6 April 2025, announced at the Autumn Budget 2024. The lower threshold adds employer NI on salary between £5,000 and £9,100, which matters most for part-time and lower-paid staff. For a £30,000 employee, employer NI rose from £2,884 in 2024/25 to £3,750 in 2026/27, an increase of £866 a year.

Worked example: £45,000 salary, 2026/27

Salary above the threshold: £45,000 - £5,000 = £40,000
Employer NI: £40,000 x 15% = £6,000 a year
The same salary in 2024/25: £35,900 x 13.8% = £4,954, so the employer now pays £1,046 more for the same job.

The calculator handles 2023/24, 2024/25, 2025/26 and 2026/27 so you can compare years directly.

Employment Allowance: the £10,500 credit

Eligible employers can claim Employment Allowance as a credit against their employer Class 1 NI bill. For 2026/27 it is £10,500 a year (it was £5,000 in 2024/25). From April 2025 there is no longer a limit on the size of the previous year’s employer NI bill, so larger employers can claim too.

Eligibility rules (from gov.uk):

You are a business or charity, and do less than half your work in the public sector (unless you are a charity).
If your company has only one director, that director must not be the only employee liable for employer Class 1 NI.
Only one company in a group of connected companies can claim.

In the calculator, toggle “Apply Employment Allowance” to see employer NI after the credit. The allowance is an annual amount for the employer, not per employee: an employer with five staff uses one £10,500 allowance against the whole payroll’s NI. For modelling a single hire, treating it as available is an upper bound.

Auto-enrolment workplace pension: 3% minimum

Under automatic enrolment, the minimum employer contribution is:

3% of qualifying earnings, the slice of pay between £6,240 and £50,270 a year. The £6,240 lower limit is set for auto-enrolment and is not the National Insurance Lower Earnings Limit.
A total minimum contribution (employer plus employee, including tax relief) of 8% of qualifying earnings.

For a £30,000 salary, qualifying earnings are £30,000 - £6,240 = £23,760; the employer’s 3% is £713 a year. At £50,270 or more, qualifying earnings max out at £44,030, so the statutory minimum employer contribution is £1,321 a year.

Beyond the minimum

Many employers pay more than the minimum, for example a fixed percentage of full salary or a match of the employee’s contribution. Toggle the “Pension base” selector between “Qualifying earnings” and “Full gross salary” to see the impact. A 5% on-gross contribution on a £75,000 salary costs the employer £3,750, against the £1,321 statutory minimum.

Benefits in Kind and Class 1A NI

When the employer provides a taxable non-cash benefit - private medical, company car, gym membership - it is reported to HMRC and the employer pays Class 1A NI at 15% on its cash equivalent. Class 1A is an employer-only charge: the employee pays Income Tax on the benefit but no employee NI.

Worked example: £1,500 private medical policy

Cash outlay: £1,500 (the premium paid to the insurer).
Class 1A NI: £1,500 x 15% = £225.
Cost to employer: £1,725 a year.

The calculator lets you enter three benefit categories:

Private medical insurance - the annual premium.
Company car - two figures. The taxable value (list price x appropriate percentage; use our P11D / BIK calculator) is what Class 1A is charged on; it is not money the employer pays. The car’s actual annual cost to the business (lease or depreciation, insurance, servicing) is entered separately and is what the calculator adds as cash.
Other taxable benefits - gym, life cover and similar. Trivial benefits (costing £50 or less, not cash or a cash voucher, not a reward for work) are exempt (gov.uk).

With salary sacrifice the dynamics change: the employer saves employer NI on the salary given up, and for a benefit such as a car pays Class 1A on its taxable value instead.

Apprenticeship Levy: a payroll-level charge, not per employee

The Apprenticeship Levy is 0.5% of the employer’s total annual pay bill, less a £15,000 annual allowance, so only employers with a pay bill over £3,000,000 pay anything. It is paid monthly through PAYE (gov.uk).

It is not a per-employee cost: below £3,000,000 the employer pays nothing whatever an individual earns. Above it, each extra £50,000 of pay adds £250 of levy. Because it depends on the whole pay bill, this calculator does not include the levy in its total; use the Apprenticeship Levy calculator with your full pay bill.

Putting it all together: the cost multiplier

The cost ratio (total cost / gross salary) is the most useful headline. Computed for 2026/27, with no Employment Allowance:

£25,000, employer NI and 3% auto-enrolment minimum: 1.14x.
£45,000, the same plus a £1,500 medical policy: 1.20x.
£65,000, 5% pension on full salary plus £1,500 medical: 1.22x.
£75,000, 8% pension on full salary, £2,000 medical and a car with a £2,000 taxable value (Class 1A only; the car’s own lease or running cost comes on top): 1.25x.

Use the calculator with your own scheme rules before signing an offer letter.

What the April 2025 changes did to a payroll

For a 50-person employer paying an average £35,000 (and no Employment Allowance):

2024/25 employer NI: £25,900 x 13.8% x 50 = £178,710.
2026/27 employer NI: £30,000 x 15% x 50 = £225,000.
Increase: £46,290 a year, £926 per employee.

The rise in Employment Allowance from £5,000 to £10,500, and the removal of the limit on who can claim it, offsets part of this for smaller employers.

Sources

HMRC: Rates and thresholds for employers 2026 to 2027.
HMRC: National Insurance rates and categories.
HMRC: Employment Allowance (retrieved 2026-10-01).
HMRC: Pay Apprenticeship Levy (retrieved 2026-10-01).
gov.uk: Workplace pensions: what you, your employer and the government pay (retrieved 2026-10-01).
gov.uk: Trivial benefits: what’s exempt (retrieved 2026-10-01).

See our methodology for sources and testing approach.

UK Apprenticeship Levy Calculator - 0.5% of the pay bill less a £15,000 allowance.
P11D / BIK Calculator - cash equivalent of company car, fuel, medical and other benefits.
Company Car Tax Calculator - the CO2 appropriate percentage behind the car’s taxable value.
Salary Sacrifice Calculator - employer NI savings on pension and EV sacrifice.
IR35 Deemed Payment Calculator - the comparable calculation for off-payroll workers inside IR35.
National Insurance Rates Explainer - Class 1, Class 1A, Class 1B and Class 2/4 in context.

Browse total employer cost by salary

Pre-calculated true cost of employment across popular salaries for 2026/27, including employer National Insurance and the minimum auto-enrolment pension.

Other UK tax calculators that pair with the Employer Cost.

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Frequently asked questions

What is the true cost of hiring an employee in the UK in 2026/27?

Total cost-to-employer is gross salary plus employer Class 1 NI at 15% on salary above the £5,000 Secondary Threshold, plus the employer pension contribution (auto-enrolment minimum 3% of qualifying earnings), plus the cost of any taxable benefits and Class 1A NI at 15% on them. For a £45,000 salary with the minimum pension and no benefits, the total is £52,163, 1.16x the salary.

How much is UK Employer NI (Class 1 Secondary) in 2026/27?

Employer NI is 15% of salary above the Secondary Threshold of £5,000 a year. From 6 April 2025 the rate rose from 13.8% to 15% and the threshold fell from £9,100 to £5,000. For a £30,000 salary, employer NI is (£30,000 - £5,000) x 15% = £3,750 a year; for £75,000 it is £10,500. There is no upper limit.

What is the minimum employer pension contribution for auto-enrolment?

The employer minimum is 3% of qualifying earnings - pay between £6,240 and £50,270 a year. For a £30,000 salary that is 3% of £23,760 = £713 a year. The total minimum contribution, employer and employee together, is 8% of qualifying earnings. Schemes can require more, and many employers pay more.

What is the Employment Allowance and who can claim it?

The Employment Allowance reduces an employer's Class 1 NI bill by up to £10,500 a tax year in 2026/27 (it was £5,000 in 2024/25). Since April 2025 employers of any size can claim; before that, the previous year's employer NI had to be under £100,000. Public bodies and businesses doing more than half their work in the public sector cannot claim (charities excepted), nor can a company whose only director is the only employee liable for employer NI. It is claimed through the Employment Payment Summary and used against NI each payday until it runs out.

Do I pay Apprenticeship Levy on every employee?

No - the Apprenticeship Levy is 0.5% of the total annual pay bill, less a £15,000 allowance, so only employers with a pay bill over £3,000,000 pay it. Below that the employer pays nothing whatever individual salaries are. Above it, each extra £1,000 of pay costs £5 in levy. It is best modelled for the whole workforce - see our Apprenticeship Levy calculator.

How are Benefits in Kind costed for the employer?

Taxable benefits (private medical, company cars, gym memberships and so on) are reported to HMRC and the employer pays Class 1A NI at 15% on their cash equivalent. So a £1,500 medical policy costs £1,500 in premiums plus £225 Class 1A: £1,725. The employee pays Income Tax on the benefit but no employee NI. Class 1A is an employer-only charge.

How does the £5,000 Secondary Threshold compare to the employee thresholds?

Employee Class 1 NI starts at the Primary Threshold of £12,570. The employer Secondary Threshold is £5,000, so for an employee earning £8,000 the employee pays no NI but the employer pays 15% on £3,000 = £450. Before April 2025 the Secondary Threshold was £9,100, so the employer paid nothing on that salary.

What is a typical cost ratio (total cost / salary) in the UK?

Computed for 2026/27 without Employment Allowance: £25,000 with the minimum pension, 1.14x; £45,000 with the minimum pension, 1.16x; £65,000 with 5% of full salary into the pension and a £1,500 medical policy, 1.22x. Above £50,270 the minimum pension stops growing, so on the statutory minimum the ratio flattens towards 1 + 15% as salary rises.