Minimum wage

Minimum wage employer cost UK (2025/26)

The National Living Wage (NLW) for workers aged 21 and over is £12.21 per hour from April 2025, giving an annual salary of approximately £23,810 for a standard 37.5-hour week. For employers, the true cost of a minimum wage employee in 2025/26 is higher — employer NI at 15% on earnings above £5,000 adds approximately £2,821 per year, and minimum auto-enrolment pension adds approximately £524 per year. Total employer cost for a full-time NLW employee: approximately £27,155 per year before overheads. Use the calculator below for any specific salary or hours.

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

National Living Wage (21+): £12.21/hr from April 2025. Full-time ≈ £23,810/yr.
National Minimum Wage (18–20): £10.00/hr. Under-18: £7.55/hr.
Employer NI on £23,810: approximately £2,821/year (15% above £5,000).
Employer pension on £23,810: approximately £524/year (3% of qualifying earnings).
Total employer cost for full-time NLW employee: approximately £27,155/year before overheads.

Use the live tools

Calculate minimum wage employer cost 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

What is the National Living Wage from April 2025?

The National Living Wage (NLW) for workers aged 21 and over is £12.21 per hour from April 2025. For a 37.5-hour week, this gives an annual salary of approximately £23,810. The rate increased from £11.44 per hour in 2024/25.

How much does a minimum wage employee cost an employer?

A full-time employee on the 2025/26 National Living Wage (£23,810/year) costs an employer approximately £27,155 per year: £23,810 salary + £2,821 employer NI (15% above £5,000) + £524 employer pension (3% of qualifying earnings). With typical overheads of £2,000–£3,000, total rises to approximately £29,000–£30,000.

Do employers pay NI on minimum wage workers?

Yes. Employer NI at 15% applies on all earnings above £5,000 per year, regardless of wage rate. A minimum wage employee earning £23,810 per year generates £2,821 in employer NI. The April 2025 threshold change from £9,100 to £5,000 specifically increased costs for lower-paid workers, including those on minimum wage.

Has Employment Allowance changed what minimum wage workers cost?

Employment Allowance can eliminate the employer NI bill for eligible small employers — up to £10,500 per year. For businesses with small teams all earning near minimum wage, this can reduce the per-employee NI cost to zero. Single-director companies without other staff cannot claim.

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