Minimum wage

Minimum wage employer cost UK (2026/27)

The National Living Wage (NLW) for workers aged 21 and over is £12.71 per hour from April 2026, giving an annual salary of approximately £24,785 for a standard 37.5-hour week. For employers, the true cost of a minimum wage employee in 2026/27 is higher — employer NI at 15% on earnings above £5,000 adds approximately £2,968 per year, and minimum auto-enrolment pension adds approximately £556 per year. Total employer cost for a full-time NLW employee: approximately £28,309 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 2026/27 tax year.

Calculate minimum wage employer cost Full employer cost calculator Cost by salary Employer NI by salary

Sample total cost

£43,363

£3,614 per month on £35,000 salary

Employer NI

£4,500

15% above £5,000 secondary threshold (2026/27)

Pension + overheads

£3,863

Baseline employer pension plus configured overheads

Key assumptions — UK 2026/27
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 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 2026/27.

Auto-enrolment pension

Minimum employer contribution 3% on qualifying earnings.

Employment Allowance

Up to £10,500 relief in 2026/27 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 2026?
The National Living Wage (NLW) for workers aged 21 and over is £12.71 per hour from April 2026. For a 37.5-hour week, this gives an annual salary of approximately £24,785. The rate increased from £12.21 per hour in 2026/27.
How much does a minimum wage employee cost an employer?
A full-time employee on the 2026/27 National Living Wage (£24,785/year) costs an employer approximately £28,309 per year: £24,785 salary + £2,968 employer NI (15% above £5,000) + £556 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 £24,785 per year generates £2,968 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: 18 August 2026. Estimates use 2026/27 assumptions and are for planning, not legal or tax advice.

Ready to run payroll for this hire? Sage Payroll handles RTI submissions, auto-enrolment and payslips — HMRC-recognised and built for UK small businesses. Try Sage Payroll →

Affiliate link — we may earn a commission if you sign up, at no extra cost to you.

Written and reviewed by James Whitfield and the editorial team.

Every figure is checked against current HMRC and GOV.UK guidance and reviewed for the 2026/27 tax year. We explain the numbers in plain English with worked examples. Editorial standards · About us