Tech & IT sector
Cost of employing IT staff UK (2026/27)
IT and technology staff are among the highest-compensated employees in the UK labour market, with demand consistently outpacing supply in software development, data engineering, and cybersecurity roles. At a mid-market developer salary of £55,000, the total employer cost in 2026/27 is approximately £63,822 per year — employer NI of £7,500 (15% above £5,000) plus minimum pension of £1,322 on qualifying earnings. For senior engineers and architects at £75,000–£90,000, employer NI rises to £10,500–£12,750 per year. Many IT employers also compete on benefits, adding further to total employment cost above the statutory floor.
UK scope: England, Scotland, Wales and Northern Ireland employer payroll planning for the 2026/27 tax year.
Sample total cost
£63,821
£5,318 per month on £55,000 salary
Employer NI
£7,500
15% above £5,000 secondary threshold (2026/27)
Pension + overheads
£1,321
Baseline employer pension plus configured overheads
Key assumptions — UK 2026/27
Employer NI: 15% on earnings above the £5,000 secondary threshold
Employer pension: minimum 3% on qualifying earnings £6,240–£50,270
Employment Allowance: up to £10,500 off the NI bill for eligible employers
Worked examples: £30k salary → £34,464/yr · £35k → £40,363/yr · £50k → £58,063/yr
What this page helps you check
- Junior developer / IT analyst: £30,000–£40,000. Employer NI: £3,750–£5,250.
- Mid-level developer / engineer: £45,000–£65,000. Employer NI: £6,000–£9,000.
- Senior developer / tech lead: £65,000–£90,000. Employer NI: £9,000–£12,750.
- Data engineer / DevOps: £50,000–£80,000.
- IT manager / head of engineering: £70,000–£110,000.
- Employer pension capped at qualifying earnings of £50,270 — minimum cost £1,322/year above that.
UK assumptions used
Employer NI
15% above £5,000 secondary threshold for 2026/27.
Auto-enrolment pension
Minimum employer contribution 3% on qualifying earnings.
Employment Allowance
Up to £10,500 relief in 2026/27 for eligible employers.
Frequently asked questions
Is it cheaper to hire an IT contractor than a permanent developer?
On day-rate cost, a contractor often appears more expensive than the salary equivalent — but the employer avoids NI (15%), pension, holiday pay (28 days), sick pay and other employment obligations. At £55,000 PAYE salary, total employer cost is approximately £63,822/year (£277/day at 230 days). A contractor at £350/day would cost approximately £80,500/year — but with no ongoing employment commitments. For sustained full-time work, PAYE is typically more cost-effective.
How much does IT employer NI cost at £70,000 salary?
Employer NI on £70,000 salary in 2026/27 is £9,750 per year (15% of £65,000 above the £5,000 threshold). Minimum pension on qualifying earnings (£50,270 cap) is £1,322/year. Total employer cost before overheads: approximately £81,072 per year. At £80,000 salary, total employer cost reaches approximately £92,072.
Does IR35 affect IT employer costs?
Yes. If a developer working through a limited company is deemed inside IR35, the engaging organisation becomes responsible for operating PAYE and paying employer NI at 15% on the deemed employment income. For medium and large businesses, this assessment responsibility has rested with the engaging company since April 2021. A contractor earning £350/day inside IR35 for 230 days creates approximately £10,100 in employer NI — comparable to a £70,000+ permanent employee.
UK coverage only. Last reviewed: 18 August 2026. Estimates use 2026/27 assumptions and are for planning, not legal or tax advice.
Ready to run payroll for this hire? Sage Payroll handles RTI submissions, auto-enrolment and payslips — HMRC-recognised and built for UK small businesses. Try Sage Payroll →
Affiliate link — we may earn a commission if you sign up, at no extra cost to you.