First employee

Cost of hiring your first employee in the UK (2025/26)

Hiring your first employee costs more than the salary figure on the offer letter. In 2025/26, UK employers pay employer NI at 15% on earnings above £5,000, and must make minimum 3% pension contributions once the employee is auto-enrolled. Most first-time employers also qualify for Employment Allowance, which can offset up to £10,500 of employer NI. This page gives the true cost model with worked examples and the allowance calculation included.

UK scope: England, Scotland, Wales and Northern Ireland employer payroll planning for the 2025/26 tax year.

Sample total cost

£43,363

£3,614 per month on £35,000 salary

Employer NI

£4,500

15% above £5,000 secondary threshold (2025/26)

Pension + overheads

£3,863

Baseline employer pension plus configured overheads

Key assumptions — UK 2025/26
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

Use the live tools

Calculate first employee cost Read the full guide Cost of employing by salary Employer NI by salary Auto-enrolment pension calculator

UK assumptions used

Employer NI

15% above £5,000 secondary threshold for 2025/26.

Auto-enrolment pension

Minimum employer contribution 3% on qualifying earnings.

Employment Allowance

Up to £10,500 relief in 2025/26 for eligible employers.

Official UK references

HMRC rates and thresholds Employment Allowance Pensions Regulator guidance Our methodology Our source list

Frequently asked questions

Can I claim Employment Allowance for my first employee?
Most first-time employers who are not sole-director companies can claim Employment Allowance. Once you hire at least one employee who is not a fellow director, you are usually eligible. The allowance offsets up to £10,500 of employer NI per year in 2025/26.
When do I need to auto-enrol my first employee?
You must auto-enrol within six weeks of the employee's start date if they are aged 22 to State Pension Age and earn more than £10,000 per year. Set up a pension provider (NEST is a free government-backed option) before their first payroll run.
What is the true total cost of hiring someone at £30,000?
At £30,000 salary, employer NI is £3,750 per year (15% above £5,000) and pension is £714 per year (3% of qualifying earnings). Total employer cost before overheads: approximately £34,464 per year. With Employment Allowance, the NI is offset — bringing the figure to approximately £30,714.

UK coverage only. Last reviewed: 04 April 2026. Estimates use 2025/26 assumptions and are for planning, not legal or tax advice.