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

Written by EmployerCalculator Editorial · Reviewed against official UK sources · Last updated: June 2026

A straight answer to how much it costs to employ someone in the UK in 2026/27 — with the maths, the common salary levels, and every cost component explained.

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.

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.

Once you know the cost — what next?

Running payroll correctly after you have calculated employer cost is the next practical step. The tools below handle HMRC RTI submissions, auto-enrolment pension and payslip generation automatically.

Compare UK payroll software → Open employer cost calculator Check Employment Allowance eligibility

EmployerCalculator Editorial. Content reviewed against HMRC guidance. Estimates only — not financial or legal advice. See our methodology and sources.