The true cost of hiring an employee in the UK (2026/27)

Updated 2026/27 · 5 min read · By James Whitfield, EmployerCalculator Editorial

Salary is only the first line item

Employer cost starts with salary but quickly expands into NI, pension, onboarding, equipment, software and line-manager time. Most budgeting errors happen when salary is treated as the total cost baseline.

In 2026/27, employer NI is 15% above the £5,000 threshold. Auto-enrolment pension adds at least 3% of qualifying earnings. Combined, these statutory items can add a sizeable uplift before any operational overheads.

A robust model shows annual and monthly totals and reports cost above salary as a percentage. That percentage is useful for hiring managers who need a quick way to compare role options and timing.

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A repeatable cost model

Start with gross salary, then calculate employer NI on current-year rates and thresholds. Next add minimum employer pension on qualifying earnings. Finally include overhead assumptions that are specific to your organisation.

Overheads normally include laptop and peripherals, SaaS licences, security tooling, desk space, and training. For many office-based teams, £2,000 to £5,000 per employee per year is a common planning range.

Use one model template across finance and people teams so approval conversations are consistent. This reduces disputes created by conflicting spreadsheets.

Using the model for decisions

Use monthly-first outputs for cash planning and annual outputs for headcount plans. Managers usually understand monthly burn faster, while finance needs annual totals for forecasting.

When comparing candidates or grades, evaluate the full cost delta, not salary delta. The NI and pension increments can materially change affordability near budget limits.

Treat the calculator as a decision aid, not legal advice. Employment law and contractual terms can introduce additional obligations beyond baseline statutory cost estimates.

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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, £417 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 (13.8% above £9,100), the same salary produced £3,574 in employer NI. The April 2025 changes therefore add £926 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 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.