snapcalcs

Employer cost calculator

See the true cost of hiring someone in the UK — salary, 15% employer National Insurance, pension, and Employment Allowance relief for 2026/27.

Auto-enrolment minimum is 3.0%. Many employers offer 5% or more.

Total cost to employer

£46,350

For every £1 your employee receives, it costs you £1.03

Employee receives (gross)£45,000
Employer NI (15% above £5,000)+£6,000
Less Employment Allowance−£6,000
Employer pension (3.0%)+£1,350
Total cost to employer£46,350

This calculator doesn't include the Apprenticeship Levy (0.5% of pay bill over £3m — only relevant to larger employers), statutory sick/maternity pay, or employer's liability insurance. Budget for those separately.

What does it really cost to employ someone?

The salary on a job offer is only part of the story. Every permanent employee in the UK comes with employer overheads that typically add 13–18% to the headline salary. For a £45,000 role, that's around £5,500–£8,000 of additional cost per year before you count benefits, training, or recruitment fees.

The two main components are employer National Insurance at 15% on earnings above a £5,000 secondary threshold, and workplace pension contributions at a minimum of 3% of qualifying earnings under auto-enrolment (5% is common for mid-market employers, 8–10% for competitive benchmarks). Most small businesses can also claim the £10,500 annual Employment Allowance against their employer NI bill, which can wipe out NI costs entirely for a first few employees.

Employer NI rates for 2026/27

Employer (secondary) Class 1 NI is paid at 15% on every pound of an employee's annual earnings above the £5,000 secondary threshold. The threshold was lowered from £9,100 and the rate increased from 13.8% in April 2025, so employing lower-paid staff got materially more expensive for medium-to-large employers that can't claim the Employment Allowance.

The Employment Allowance sits at £10,500 for 2026/27. Eligible employers can reduce their employer NI bill by up to this amount over the course of the tax year. At £10,500, a small employer can effectively hire someone earning up to around £75,000 before paying any employer NI at all.

Auto-enrolment pension obligations

Under auto-enrolment, employers must enrol eligible jobholders (aged 22 to State Pension age, earning over £10,000 per year) into a qualifying workplace pension. The statutory minimum contribution is:

Qualifying earnings are earnings between the NI lower earnings limit and the upper earnings limit, though many schemes contribute on the full salary (“total earnings” basis). Employees can opt out after enrolment, but must be re-enrolled every three years.

Frequently asked questions

The Employment Allowance lets eligible employers reduce their annual Class 1 employer NI bill by up to £10,500 (2026/27). It's claimed through your payroll software or via HMRC's Basic PAYE Tools. Most businesses and charities with at least one employee qualify. Key exclusions: single-director limited companies with no other employees on PAYE over the secondary threshold, public-sector bodies, and businesses where more than half of the work is public in nature. The allowance is offset against your monthly employer NI bill until it's used up.

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