How Much Does an Employee Cost a UK Employer? (2026/27 Answer)

The short answer, with numbers

For 2026/27, a UK employee on a £30,000 salary costs their employer approximately £34,263 per year in direct statutory costs — salary, employer NI and minimum pension. A £35,000 employee costs around £40,363. A £40,000 employee costs around £46,463. These figures assume employer NI at 15% above the £5,000 secondary threshold and auto-enrolment pension at 3% on qualifying earnings.

Every £1,000 added to salary above the secondary threshold costs the employer approximately £1,150 in total statutory cost: £1,000 salary plus £150 NI (15% of £1,000). Pension adds a further 3% on qualifying earnings. In practical terms, approving a £1,000 pay rise costs closer to £1,180 after NI and pension are included.

Employer NI: the biggest add-on above salary

Employer NI for 2026/27 is charged at 15% on earnings above the £5,000 secondary threshold. There is no upper limit — unlike employee NI, which reduces to 2% at higher salaries, employer NI stays at 15% all the way up. This means the NI cost per employee grows in a straight line with salary above the threshold.

For context: at £25,000 salary, employer NI is £3,000/year (£250/month). At £30,000 it is £3,750/year (£312.50/month). At £40,000 it is £5,250/year (£437.50/month). At £50,000 it is £6,750/year (£562.50/month). At £100,000 it is £14,250/year (£1,187.50/month).

Pension: auto-enrolment minimum

Most employees must be auto-enrolled in a workplace pension once they earn above £10,000 and are aged between 22 and state pension age. The minimum employer contribution is 3% of qualifying earnings, where qualifying earnings are the portion of salary between £6,240 and £50,270.

At £30,000 salary, qualifying earnings are £23,760 and minimum pension is £712.80/year. At £35,000, qualifying earnings are £28,760 and pension is £862.80/year. At £50,000, qualifying earnings are £44,030 and pension is £1,320.90/year. Above £50,270, qualifying earnings are capped, so employer pension contribution does not increase further at the statutory minimum rate.

Employment Allowance: offsetting some of the NI cost

Eligible employers can claim Employment Allowance to offset up to £10,500 of their annual employer NI bill. This means a small employer with total employer NI below £10,500 can potentially pay no employer NI at all in 2026/27. Eligibility requires that your employer NI liability was under £100,000 in the previous tax year, and the allowance cannot be claimed by sole directors with no other employees.

For a business with three employees each earning £35,000, total employer NI is £13,500. After Employment Allowance of £10,500, net NI payable is £3,000. That materially changes the effective cost per employee for small businesses, though large employers will exhaust the allowance quickly.

Quick reference table: employer cost at common salaries

The following figures show annual employer cost for 2026/27 at standard pension rate (3%) and no overheads: £20,000 salary — NI £2,250 — pension £415 — total £22,665. £25,000 — NI £3,000 — pension £563 — total £28,563. £30,000 — NI £3,750 — pension £713 — total £34,463. £35,000 — NI £4,500 — pension £863 — total £40,363. £40,000 — NI £5,250 — pension £1,013 — total £46,263. £50,000 — NI £6,750 — pension £1,321 — total £58,071. £60,000 — NI £8,250 — pension £1,321 — total £69,571.

Use the full employer cost calculator at /calculator to enter any salary and add operational overheads specific to your organisation. All figures on this page use 2026/27 rates: employer NI 15% above £5,000, pension 3% on qualifying earnings £6,240–£50,270, Employment Allowance offset available on request.

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Frequently asked questions

How much does it cost to employ someone in the UK?

The true cost to employ someone in the UK is typically 15–20% above gross salary. At £30,000: employer NI £3,750 + pension £713 = approximately £34,463 per year. At £50,000: employer NI £6,750 + pension £1,313 = approximately £58,063 per year. Adding workplace overheads of £2,000–£5,000 can bring the total to 20–25% above the headline salary.

What is the employer NI rate for 2026/27?

For 2026/27, employer Class 1 National Insurance is charged at 15% on employee earnings above the secondary threshold of £5,000 per year (£96 per week, £416 per month). This rate increased from 13.8% in April 2025, when the threshold was simultaneously cut from £9,100 to £5,000. Both changes apply from 6 April 2025.

How much employer NI do I pay on a £35,000 salary?

At £35,000 salary, employer NI for 2026/27 is £4,500 per year — 15% on £30,000 of earnings above the £5,000 threshold. That is £375 per month. In 2024/25, the same salary produced £3,585 in employer NI. The April 2025 changes therefore add £915 per year on this salary alone.

What is Employment Allowance and who can claim it?

Employment Allowance lets eligible employers reduce their annual employer NI bill by up to £10,500 in 2026/27, increased from £5,000 in 2024/25. The previous £100,000 NI bill eligibility cap has been removed, so more businesses qualify. Companies where the only paid employee is also a director cannot claim. Apply through payroll software via the Employer Payment Summary indicator.

What is the total employer cost above salary?

Beyond salary, employer cost includes: employer NI (15% on earnings above £5,000), employer pension (minimum 3% of qualifying earnings between £6,240 and £50,270), and overheads such as equipment, software and workspace. For most UK salaries this adds 12–20% above headline pay. Use the inputs above to set your exact pension rate and overhead figure.

What changed for employers in April 2025?

Three changes took effect from 6 April 2025: the employer NI rate rose from 13.8% to 15%, the secondary threshold was cut from £9,100 to £5,000, and Employment Allowance increased from £5,000 to £10,500 with the eligibility cap removed. For a £30,000 salary, annual employer NI increased from approximately £2,884 to £3,750 — a rise of £866 per year.

How is employer NI different from employee NI?

Employer NI is a cost paid by the employer on top of gross salary — it does not reduce take-home pay. Employee NI is deducted from the employee's wages instead. For 2026/27, employees pay 8% on earnings between £12,570 and £50,270, then 2% above that. Employers pay 15% on all earnings above £5,000 with no upper cap. This calculator covers the employer side; for employee take-home pay see AfterTaxSalary.co.uk.

What are employer costs in the UK?

UK employer costs in 2026/27 are: gross salary, employer NI at 15% on earnings above £5,000, employer pension at minimum 3% of qualifying earnings (£6,240–£50,270), and any operational overheads such as equipment or software. For a £35,000 salary, statutory employer costs (NI + pension) add approximately £5,363/year before overheads.

How much do I cost my employer in the UK?

If you earn £35,000, you cost your employer roughly £40,363/year — your salary plus £4,500 employer NI and £863 minimum pension. At £50,000, the total is approximately £58,063. Your employer pays these on top of your salary; they are not deducted from your pay. Use this calculator to see the exact figure for your salary.

Is this a PAYE cost calculator for employers?

Yes. PAYE employer costs include employer NI — calculated at 15% above £5,000 for 2026/27 — plus the employer's auto-enrolment pension contribution. The full calculator models both alongside any overhead assumptions to give a total PAYE-basis employer spend per employee.

What is a cost to company (CTC) salary in the UK?

Cost to company (CTC) in the UK refers to the total annual cost of an employee to their employer — salary, employer NI, pension, and overheads combined. A £35,000 CTC salary typically means a gross salary of roughly £30,000–£32,000 once the employer's NI and pension obligations are included in the total. Use this calculator to work backwards from a CTC budget to a gross salary.