Employer cost calculator 2026/27: the true cost of employing someone
Employing someone in 2026/27 usually costs their pay plus employer National Insurance at 15% on earnings above £5,000 a year, plus at least 3% of their qualifying earnings into a workplace pension. On a £30,000 salary that adds £3,750 and £712.80, about 14.9% on top. Eligible employers can cut up to £10,500 off the bill with the Employment Allowance, and under-21s and apprentices under 25 cost less.
How much does an employee cost?
Enter the pay and a few details about the employee and your business. The result updates as you type, and nothing you enter is stored or sent anywhere.
Your result
Enter the pay to see the full cost of the employee.
You'll see employer National Insurance, any Employment Allowance, pension, the yearly and monthly total, a minimum wage check and the assumptions behind the figures.
This is an estimate, not advice. Book a free call and George will check the numbers with you before you hire.
Thinking about your first hire?
A new salary changes your cash flow every month. Our business advisory work builds it into your forecast and budget, so you know you can afford it before you commit. When they start, our payroll service can register you as an employer and run their pay.
What does it cost to employ someone in 2026/27?
On top of pay, most employers have two compulsory costs: employer National Insurance and a workplace pension contribution. Everything else, from a laptop to training, depends on the job. These are the 2026/27 figures the calculator uses (GOV.UK: rates and thresholds for employers 2026 to 2027).
| Cost | 2026/27 figure | Who and when |
|---|---|---|
| Employer Class 1 National Insurance | 15% on pay above £5,000 a year (£96 a week, £417 a month) | Most employees, from 6 April 2026 |
| Under-21 and apprentice relief | 0% up to £50,270 a year, then 15% | Employees under 21 and apprentices under 25, from 6 April 2026 |
| Employment Allowance | Up to £10,500 off employer Class 1 National Insurance | Eligible employers, 2026/27 tax year |
| Workplace pension (employer minimum) | 3% of earnings between £6,240 and £50,270 | Workers aged 22 to State Pension age earning over £10,000 a year, 2026/27 |
| National Living Wage | £12.71 an hour | Aged 21 and over, from 1 April 2026 |
| National Minimum Wage | £10.85 an hour (18 to 20), £8.00 (16 and 17) | From 1 April 2026 |
| Apprentice rate | £8.00 an hour | Apprentices under 19 or in their first year, from 1 April 2026 |
The minimum wage rates come from GOV.UK: National Minimum Wage and National Living Wage rates, and the pension figures from GOV.UK: workplace pensions.
How is employer National Insurance worked out?
You pay 15% on each employee's earnings above the £5,000 Secondary Threshold. For someone on £30,000 that is £25,000 × 15% = £3,750 a year. Employer pension contributions paid outside salary sacrifice don't attract National Insurance (GOV.UK: changes to salary sacrifice for pensions).
For employees under 21 and apprentices under 25, the employer rate is 0% up to the Upper Secondary Threshold of £50,270 a year, then 15% above it (GOV.UK: employer rates 2026 to 2027). On the same £30,000 salary, that saves the whole £3,750. The employee still pays their own National Insurance at 8% and 2%, but that comes out of their pay rather than adding to your cost. Our take-home pay calculator shows what they actually receive.
Who can claim the Employment Allowance?
Eligible employers can take up to £10,500 a year off their employer Class 1 National Insurance bill (GOV.UK: claim Employment Allowance). It can't reduce Class 1A National Insurance on benefits, and only one company in a connected group can claim.
A company whose sole director is also its only employee liable for employer National Insurance cannot claim (GOV.UK: Employment Allowance eligibility). Taking on someone else who is liable for employer National Insurance can make the company eligible, as long as it meets the other conditions. Our guide to paying your spouse and children explains how this works for family members.
How much pension does an employer have to pay?
You must automatically enrol workers aged 22 or over and under State Pension age who earn more than £10,000 a year and usually work in the UK (DWP: 2026/27 earnings trigger and qualifying earnings band). You then pay at least 3% of their qualifying earnings, which for 2026/27 are earnings between £6,240 and £50,270 a year. The total minimum is 8%, with the employee normally paying the other 5%.
On £30,000 the employer minimum is (£30,000 − £6,240) × 3% = £712.80. Workers who don't meet the conditions can usually still ask to join, and you cannot refuse. You don't have to contribute for anyone earning £520 a month or less (GOV.UK: joining a workplace pension).
Do I have to pay the minimum wage?
Yes, to anyone who is a worker and above school leaving age (usually 16). From 1 April 2026 the National Living Wage is £12.71 an hour for workers aged 21 and over. Add hours per week and the calculator checks the pay against the rate for the employee's age. A director's spouse or child employed by the company is entitled to the minimum wage for their age, even if they live with the director (HMRC manual NMWM05160). Directors themselves are only entitled if they also have a contract that makes them a worker (NMWM05140).
Worked example: hiring someone on £25,000
Say your business takes on a 30-year-old on £25,000 a year for 37.5 hours a week. It can claim the Employment Allowance and hasn't used any of it yet, pays the minimum pension and budgets £1,000 for a laptop and training.
- Hourly pay: £25,000 ÷ (37.5 × 52) = £12.82, above the £12.71 National Living Wage.
- Employer National Insurance: (£25,000 − £5,000) × 15% = £3,000.
- Employment Allowance: −£3,000, leaving £7,500 for other staff this tax year.
- Pension: (£25,000 − £6,240) × 3% = £562.80.
- Laptop and training: £1,000.
- Total: £26,562.80 a year, or £2,213.57 a month. That is 6.25% on top of the salary.
Without the Employment Allowance the same employee costs £29,562.80, which is 18.25% on top of the salary. That gap is why it's worth checking whether your business can claim before you hire.
What doesn't the calculator cover?
It gives a clear yearly estimate for one employee. It leaves out:
- Benefits in kind such as a company car or health insurance, which carry Class 1A National Insurance at 15% (GOV.UK: employer rates).
- Bonuses, overtime, salary sacrifice, and statutory sick or family pay.
- The Apprenticeship Levy, which only employers with a pay bill over £3 million pay (GOV.UK: Apprenticeship Levy).
- The 0% employer rate for qualifying veterans in their first year of civilian work, which runs until 5 April 2028 (GOV.UK: Budget 2025 overview).
- Children below school leaving age, who aren't entitled to the minimum wage and don't pay National Insurance if under 16.
- The employee's own income tax, National Insurance and student loan deductions, which come out of their pay rather than adding to your cost.
- Recruitment, insurance and other overheads, unless you add them as other yearly costs.
Real payroll works pay period by pay period, so the final figures can differ slightly from a yearly estimate, especially for anyone whose pay goes up and down.
Want us to run payroll for you? Our payroll services for small businesses cover registering as an employer, weekly or monthly pay runs, payslips, the RTI submissions to HMRC and pension auto-enrolment.
Related services, tools and guides
Hiring touches your payroll, your cash flow, your own pay and your tax. These pages pick up where this calculator stops.
Payroll
We register you as an employer, run each pay run, issue payslips and send HMRC every RTI submission on time.
Business advisory
Test a new hire against your cash-flow forecast and budget before you commit.
Take-home pay calculator
See what your employee receives after income tax and National Insurance.
Paying your spouse and children
How to pay family members through your business, including the Employment Allowance rules.
How to pay yourself as a director
Salary, dividends and pension for company directors at the 2026/27 rates.
Payroll deadlines 2026/27
When each FPS, PAYE payment, P60 and P11D is due, in our tax deadlines calendar.
Free white paper
How do I pay my spouse or children? 2026/27
Salaries and shares for your spouse, employing your children, when the Employment Allowance can open up, and the golden rules that keep it all on the right side of HMRC. Free to download.
Frequently asked questions
How much does an employee cost on top of their salary?
For most employees in 2026/27, the main extra costs are employer National Insurance at 15% on pay above £5,000 a year and a pension contribution of at least 3% of earnings between £6,240 and £50,270. On a £25,000 salary that is £3,000 plus £562.80, a total of £28,562.80 or 14.25% more than the salary, before any Employment Allowance or other costs.
What is the employer National Insurance rate for 2026/27?
Employers pay 15% on each employee's earnings above the Secondary Threshold of £5,000 a year (£96 a week or £417 a month). For employees under 21 and apprentices under 25, the rate is 0% up to the Upper Secondary Threshold of £50,270 a year and 15% above it. Employees still pay their own National Insurance at the normal rates.
Who can claim the Employment Allowance?
Eligible employers can take up to £10,500 a year off their employer Class 1 National Insurance bill. A company whose only director is also the only employee liable for employer National Insurance cannot claim, and only one company in a connected group can claim. The allowance cannot reduce Class 1A or Class 1B National Insurance or the employee's own contributions.
Do I have to pay into a pension for my employee?
Yes, if they are aged 22 or over and under State Pension age, earn more than £10,000 a year and usually work in the UK. You must automatically enrol them and pay at least 3% of their qualifying earnings, which are earnings between £6,240 and £50,270 a year, towards a total minimum of 8%. Workers who don't qualify can usually ask to join, and you cannot refuse.
What is the minimum wage from April 2026?
From 1 April 2026 the National Living Wage is £12.71 an hour for workers aged 21 and over. The minimum is £10.85 for 18 to 20 year olds and £8.00 for 16 and 17 year olds. Apprentices under 19 or in the first year of their apprenticeship can be paid £8.00 an hour, and other apprentices must get the rate for their age.
Written and reviewed by George Nicholson BFP ACA, ICAEW Chartered Accountant. Last reviewed 20 October 2026. This page is general information, not personal advice.
Planning to take someone on?
Book a free call and George will help you check the real cost of the role, whether you can claim the Employment Allowance, and how the new salary fits your cash flow.