Cost of employing

Cost of employing someone in the UK by salary (2026/27)

Quick answer

Employing someone costs about 14% to 16% more than their salary in 2026/27: the salary, plus employer National Insurance at 15% on pay above £5,000, plus at least 3% pension on earnings between £6,240 and £50,270. A £30,000 hire costs £34,462.80 a year (£3,750 NI + £712.80 pension) and £35,000 costs £40,362.80. Employment Allowance can take up to £10,500 off the NI.

Enter a salary below for the instant total, or pick a common salary for a full breakdown. National Insurance only? See employer NI by salary. For overheads or Employment Allowance, use the full employer cost calculator. Hiring for the first time? Start with the first-time employer checklist.

£
Total cost to employ on £35,000
£40,363 / year
Salary
£35,000
Employer NI
£4,500
Pension (3%)
£863
Monthly cost
£3,364
% above salary
15.3%

Baseline cost for 2026/27: salary + employer NI (15% above £5,000) + minimum 3% workplace pension on qualifying earnings. Excludes overheads, recruitment and the £10,500 Employment Allowance. Estimates only.

Quick answers — employer cost in 2026/27
£25,000 salary: ~£28,563/yr total employer cost
£30,000 salary: ~£34,463/yr total employer cost
£35,000 salary: ~£40,363/yr total employer cost
£40,000 salary: ~£46,263/yr total employer cost
£50,000 salary: ~£58,063/yr total employer cost
£75,000 salary: ~£86,821/yr total employer cost

Formula: salary + (salary − £5,000) × 15% NI + (qualifying earnings) × 3% pension. No overheads or Employment Allowance applied above.

Just costing a hire? Check if it could cost less — free relief check 

Employer cost quick reference (2026/27)

Salary Employer NI Pension (3%) Total cost % above salary
£20,000 £2,250 £413 £22,663 +13.3%
£25,000 £3,000 £563 £28,563 +14.3%
£30,000 £3,750 £713 £34,463 +14.9%
£35,000 £4,500 £863 £40,363 +15.3%
£40,000 £5,250 £1,013 £46,263 +15.7%
£50,000 £6,750 £1,313 £58,063 +16.1%
£60,000 £8,250 £1,321 £69,571 +16.0%
£75,000 £10,500 £1,321 £86,821 +15.8%
£100,000 £14,250 £1,321 £115,571 +15.6%

Employer NI: 15% above £5,000. Pension: 3% of qualifying earnings (£6,240–£50,270). No Employment Allowance applied.

Worked example: the true cost of a £30,000 employee

A £30,000 salary costs considerably more than £30,000 to a UK employer in 2026/27.

Cost component Annual Monthly
Gross salary £30,000 £2,500
Employer NI (15% × £25,000) £3,750 £313
Pension (3% × £23,760 qualifying) £713 £59
Total employer cost £34,463 £2,872

NI: 15% above £5,000 threshold (£30,000 − £5,000 = £25,000 × 15%). Pension: qualifying earnings £6,240–£30,000 = £23,760 × 3%. No Employment Allowance or overheads.

How it works

1. Choose salary

Open a salary page to get baseline statutory employer cost.

2. Review NI + pension

Check each component separately before looking at the all-in total.

3. Move to full calculator

Add overheads and allowance to convert baseline into hiring budget reality.

£15,000 £20,000 £25,000 £30,000 £35,000 £40,000 £45,000 £50,000 £60,000 £75,000 £100,000

Need a salary not listed? Use the full employer cost calculator for any amount. Want NI only? Go to employer NI by salary. Planning a whole team? Use the payroll planner.

Choose the right page for the job

Cost of employing by salary

Best if you want a fast answer for a specific salary such as £30,000, £35,000 or £50,000.

Full employer cost calculator

Best if you need custom pension, overheads, hourly pay or Employment Allowance assumptions.

Employer NI by salary

Best if your query is specifically about employer NI rather than total salary cost to employer.

The true-cost stack: what you actually pay above the salary

"How much does it cost to employ someone" has four layers, and only the first is the number on the job advert. The first three are the same for every UK employer in 2026/27; the fourth is where businesses differ. Working through them in order is the quickest way to turn a salary into a budget you can sign off.

Layer 1 · Gross salary

The contractual figure. For hourly staff, convert it honestly: £12.71 an hour (the 2026/27 National Living Wage) on a 37.5-hour week is £24,784.50 a year, not £12.71 × 40 × 48. Paid holiday is part of the salary, so use all 52 weeks.

Layer 2 · Employer NI at 15%

15% of everything above £5,000 a year, with no upper cap — £3,750 on a £30,000 salary, £6,750 on £50,000. Employees under 21 and apprentices under 25 are 0% up to £50,270, and Employment Allowance removes up to £10,500 a year for eligible employers. Full rates →

Layer 3 · Pension at 3%

Auto-enrolment obliges a minimum 3% employer contribution — but only on qualifying earnings between £6,240 and £50,270, not the whole salary. That is £712.80 at £30,000 and £1,320.90 at any salary of £50,270 or more, where it stops rising. Staff must be 22 or over and earning above £10,000 to be enrolled automatically.

Layer 4 · On-costs

Not statutory, but real cash: equipment and software (£900–£2,700 a year), workspace, employers' liability insurance, training, payroll administration, and recruitment at 10–20% of salary in the first year. Budget £2,000–£5,000 a year per office-based head, plus cover for holiday and sickness in shift-based roles.

Layers 1–3 give the statutory floor of about 13–16% above salary — the figure in the calculator and table above. Layer 4 typically takes the real total to 20–30% above the headline salary.

Hiring cost playbook for 2026/27 budgets

For ranking pages to be useful, they need to answer the decision question, not just the formula. Use this framework when reviewing offers or headcount requests: baseline statutory cost first, then realistic overhead assumptions, then allowance eligibility.

Step 1: Statutory floor

Calculate salary + employer NI + minimum pension. This is the minimum compliant recurring cost before local policy or benefits.

Step 2: Operational reality

Layer software, equipment, training and workspace. This is where “£35k salary” often becomes £43k+ total employer spend.

Step 3: NI rise impact

Compare against 2024/25 assumptions to quantify budget drift caused by the April 2025 NI rate and threshold changes.

Step 4: Allowance check

Apply Employment Allowance where eligible. For smaller employers this can materially reduce the net NI increase.

How it works

What goes into the true cost of employing someone

The formula

Total employer cost = salary + employer NI + employer pension. Employer NI is 15% of earnings above the £5,000 secondary threshold. Employer pension is 3% of qualifying earnings between £6,240 and £50,270 under auto-enrolment rules. No upper earnings limit applies to employer NI.

What changed in April 2025

The employer NI rate rose from 13.8% to 15% and the secondary threshold dropped from £9,100 to £5,000 — adding about £866 a year per employee on a £30,000 salary and £1,106 on £50,000 (the increase grows with pay, with no cap). Employment Allowance rose from £5,000 to £10,500 (with the previous NI-bill eligibility cap removed) to partially offset costs for eligible small employers.

Employment Allowance

Eligible employers can claim up to £10,500 off their employer NI bill per year (2026/27). Most limited companies with at least one employee who is not a sole director qualify. This effectively reduces employer NI to zero for smaller employers up to a certain payroll size.

Other employer costs

Beyond NI and pension, real employer costs include recruitment (typically £2,000–£5,000 per hire), training, equipment, workspace, and benefits such as health insurance or enhanced pension. The full calculator focuses on the statutory minimums — the guaranteed floor of what each employee costs.

Mandatory vs optional and indirect employer costs

The calculator covers the mandatory statutory costs every UK employer must pay. Optional and indirect costs vary by role and business — add them as overheads for a full picture.

Cost Type Notes
Gross salary Mandatory The contractual headline pay
Employer National Insurance Mandatory 15% on earnings above £5,000, no upper cap
Employer pension (auto-enrolment) Mandatory Minimum 3% of qualifying earnings (£6,240–£50,270)
Apprenticeship Levy Mandatory if pay bill > £3m 0.5% of the annual pay bill above £3 million
Recruitment Optional / one-off Job adverts and agency fees (often 10–20% of salary)
Equipment & software Optional Laptop, phone, licences (typically £900–£2,700/yr)
Training & bonuses Optional Development, commission, private healthcare
Workspace, management time & insurance Indirect Desk, utilities, supervision, employers' liability cover

Mandatory on-costs alone add roughly 13–20% to gross salary. Optional and indirect costs are business-specific — model them as overheads in the full calculator.

Stop doing this by hand — Sage Payroll works out employer NI, pension auto-enrolment, statutory sick and maternity pay and files RTI to HMRC automatically for UK employers. Try Sage Payroll →

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FAQ

Cost of employing someone — frequently asked questions

How much does employer NI cost for common UK salaries? +

Employer NI in 2026/27 is 15% on earnings above £5,000. Key figures: £25k salary = £3,000/yr NI · £30k = £3,750/yr · £40k = £5,250/yr · £50k = £6,750/yr · £75k = £10,500/yr. Click any salary below for the full breakdown.

What is the total cost of employing someone in the UK? +

Total employer cost = salary + employer NI (15% above £5,000) + employer pension (3% minimum on qualifying earnings). At £30,000, total cost is around £34,463/year. At £50,000, around £58,063/year. The exact figures depend on pension rate and whether Employment Allowance applies.

Is there a quick way to check total salary cost to employer? +

Use the formula: (salary − £5,000) × 0.15 for NI, plus 3% of qualifying earnings (between £6,240 and £50,270) for pension, then add to salary. Or select a salary from the table below for an instant, verified breakdown.

Figures reviewed for the 2026/27 tax year (last updated July 2026). Source: GOV.UK.

Related tools and guides

Want the employee's take-home view? AfterTaxSalary.co.uk calculates net pay after income tax and employee NI for any UK salary.

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