UK · 2026 to 2027 tax year
Employer cost calculator
Short answer
An employee on £30,000 costs about £34,462 a year in 2026/27: £3,749.40 of employer National Insurance (15% of pay above £5,000 a year) and £712.80 of pension (3% of qualifying earnings), 14.9% on top of salary. Claim the £10,500 Employment Allowance and that employer NI can fall to nothing.
| Item | Year | Month |
|---|---|---|
| Salary | £30,000.00 | £2,500.00 |
| Employer National Insurance | £3,749.40 | £312.45 |
| Employer pension | £712.80 | £59.40 |
| Total cost | £34,462.20 | £2,871.85 |
Worked example: hiring at £30,000
- Salary: £30,000 a year, £2,500 a month.
- Employer National Insurance: (£2,500 − £417) × 15% = £312.45 a month, £3,749.40 a year. Working it on the yearly threshold, 15% of £25,000, would give £3,750; payroll uses the monthly figure.
- Employer pension at 3% of qualifying earnings: (£2,500 − £520) × 3% = £59.40 a month, £712.80 a year.
- Total: £30,000 + £3,749.40 + £712.80 = £34,462.20 a year, £2,871.85 a month, 14.9% on top of the salary.
- With the Employment Allowance used against this employee, the National Insurance is covered in full and the cost is £30,712.80.
Figures from this calculator, using HMRC's 2026/27 National Insurance rates and The Pensions Regulator's 2026/27 qualifying earnings band. General information, not tax or legal advice.
Employer cost by salary, 2026/27
| Salary | Employer NI | Employer pension | Total cost | On top |
|---|---|---|---|---|
| £15,000 | £1,499.40 | £262.80 | £16,762.20 | 11.7% |
| £25,000 | £2,999.41 | £562.80 | £28,562.21 | 14.2% |
| £30,000 | £3,749.40 | £712.80 | £34,462.20 | 14.9% |
| £40,000 | £5,249.41 | £1,012.80 | £46,262.21 | 15.7% |
| £60,000 | £8,249.40 | £1,320.84 | £69,570.24 | 16.0% |
An employee under 21, or an apprentice under 25, on £25,000 has no employer National Insurance at all, because their pay is under the £50,270 upper secondary threshold: the cost is £25,562.80 with the 3% pension.
Employment Allowance in 2026/27
The Employment Allowance takes up to £10,500 a year off a business's employer National Insurance. That covers the employer NI on two employees on £30,000 and most of a third. You claim it by answering yes to the Employment Allowance indicator on an Employment Payment Summary (EPS) from your payroll software or HMRC's Basic PAYE Tools, and you can claim it even if your bill is less than £10,500.
- A company whose only employee paid above the Secondary Threshold is a director can't claim it.
- Household staff, such as nannies and gardeners, can't be included unless they are care or support workers.
- In a group of connected companies only one company can claim it.
- Public bodies can't claim it unless they do less than half their work in the public sector.
The official method, step by step
- Start with the gross salary. Holiday pay for 5.6 weeks a year is part of it, not an extra.
- Employer (secondary) Class 1 National Insurance: 15% of each month's pay above the Secondary Threshold of £417 a month (£5,000 a year), with no upper limit. For employees under 21 (category M) and apprentices under 25 (category H) the rate is 0% up to £4,189 a month (£50,270 a year) and 15% above.
- Employment Allowance: an eligible business takes up to £10,500 a year off its total employer National Insurance bill. It is one allowance for the whole business, so only count it here if this employee's NI is what it would cover.
- Workplace pension: under automatic enrolment the employer pays at least 3% of qualifying earnings, the part of each month's pay between £520 and £4,189 (£6,240 to £50,270 a year). Staff aged 22 to State Pension age earning £10,000 or more must be enrolled.
- Add them up: salary + employer National Insurance − Employment Allowance used + employer pension = the cost of employing them for the year.
What this leaves out
- Apprenticeship Levy: 0.5% of the whole pay bill less a £15,000 allowance, so only employers with a pay bill over £3 million pay it
- Cover for holidays, sick leave and parental leave, recruitment, equipment, training and office costs
- Statutory Sick Pay and statutory maternity, paternity or adoption pay, and what can be reclaimed from HMRC
- Freeport, Investment Zone and veteran National Insurance categories, and salary sacrifice
- Benefits in kind and Class 1A National Insurance on them (15% in 2026/27)
Sources: HMRC, Rates and thresholds for employers 2026 to 2027 (updated 1 September 2026): employer NI 15% above the £5,000 Secondary Threshold, £50,270 upper secondary threshold for under 21s and apprentices under 25, Employment Allowance £10,500, Apprenticeship Levy 0.5% with a £15,000 allowance (read 8 October 2026); GOV.UK, Employment Allowance: up to £10,500 off the annual National Insurance liability (read 8 October 2026); GOV.UK, Employment Allowance eligibility (single-director companies, household staff, connected companies) (read 8 October 2026); GOV.UK, How to claim Employment Allowance (the Employment Allowance indicator on an Employment Payment Summary) (read 8 October 2026); GOV.UK, Workplace pensions: what you, your employer and the government pay (minimum 8% total, 3% from the employer, on qualifying earnings £6,240 to £50,270) (read 8 October 2026); GOV.UK, Workplace pensions for employers: who you must enrol (aged 22 to State Pension age, earning at least £10,000 a year) (read 8 October 2026); The Pensions Regulator, Earnings thresholds 2026-2027: qualifying earnings £6,240 to £50,270 a year (£120 to £967 a week, £240 to £1,934 a fortnight, £480 to £3,867 every 4 weeks, £520 to £4,189 a month) (read 27 September 2026).
Employer cost calculator: common questions
How much does it cost to employ someone in the UK?
Salary plus about 12% to 16% for most salaries in 2026/27: employer National Insurance at 15% of pay above £5,000 a year and at least 3% pension on qualifying earnings. An employee on £30,000 costs £34,462.20 before any Employment Allowance.
What is the employer National Insurance rate for 2026/27?
15% of each employee's earnings above the Secondary Threshold, £5,000 a year or £417 a month. There's no upper limit for employers, unlike the employee's own National Insurance.
What is the Employment Allowance for 2026/27?
Up to £10,500 off the business's employer National Insurance for the tax year. It is one allowance per business (one company per connected group), and you can claim it even if your bill is less than £10,500.
Do I pay employer National Insurance for under 21s and apprentices?
Not on pay up to £50,270 a year (£4,189 a month). Use category M for employees under 21 and H for apprentices under 25; above that limit the usual 15% applies.
How much pension does an employer have to pay?
At least 3% of qualifying earnings under automatic enrolment, with a total of 8% including the employee's share. Qualifying earnings are the pay between £6,240 and £50,270 a year. Many employers pay more, or pay on all earnings.
Is holiday pay an extra cost on top of salary?
No. A salaried employee's 5.6 weeks of paid holiday is part of the salary: on £30,000 that's £3,230.77 of it. Paying someone else to cover the holiday is the extra cost.
Do small employers pay the Apprenticeship Levy?
No. The levy is 0.5% of the annual pay bill with a £15,000 allowance, so it only costs anything when the pay bill is over £3 million.
Can I make a payslip for this employee?
Yes. “Make the payslip for this salary” opens the payslip generator with a month of the salary and the National Insurance category set. It works out the employee's income tax and National Insurance.
Need a payslip for this pay?
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