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.

£35,000 Salary: True UK Employer Cost 2026/27

A £35,000 headline salary costs a UK employer £40,363 at bare statutory minimum (auto-enrolment pension only) and £42,088 on a typical package with £1,500 medical insurance. That is a 1.20x multiplier on the cash salary. Employer NIC alone is £4,500 at the 15% Class 1 Secondary rate above the £5,000 threshold. Verified against HMRC rates and thresholds for employers 2026 to 2027.

Statutory minimum

£40,363

Ratio 1.15x - NIC £4,500

Typical UK package

£42,088

Ratio 1.20x - pension £863

Employer NIC alone

£4,500

15% of salary above £5,000 ST

How the cost is built up for £35,000

Cash gross salary: £35,000 - what lands in the employee's pre-tax pay.
Class 1 Secondary NIC: 15% on the slice above the £5,000 Secondary Threshold = £4,500.
Workplace pension: 3% of qualifying earnings (£6,240 to £50,270) = £863. On-gross schemes apply the % to the full salary instead.
Benefits in Kind: what the benefit costs the employer (e.g. a £1,500 medical premium) plus Class 1A Employer NI at 15% on its taxable value. For a company car the taxable value only sets the Class 1A; the Tech profile below includes that Class 1A, not the car's lease or running cost.
Employment Allowance: eligible employers can offset up to £10,500 against their total annual Class 1 Sec NIC bill - off by default here.

All four packages at £35,000

Total cost, employer NIC, pension contribution and cost ratio across four common UK employer profiles for 2026/27. Adjust the values interactively on the main calculator.

Package	Total cost	Ratio	Employer NIC	Pension	Benefits + Class 1A
Statutory	£40,363	1.15x	£4,500	£863	£0
Typical UK	£42,088	1.20x	£4,500	£863	£1,725
Generous	£42,975	1.23x	£4,500	£1,750	£1,725
Tech	£44,900	1.28x	£4,500	£2,800	£2,600

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Related calculators

Employer cost calculator - adjust pension %, BIK and Employment Allowance interactively.
Apprenticeship Levy calculator - the 0.5% pay-bill tax above £3m, separate from per-employee cost.
P11D / BIK calculator - derive the BIK cash equivalent for company cars and other benefits.
Salary calculator - the employee side of the same salary - take-home, employee NI and Income Tax.

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.