Employer Cost Calculator 2026/27

See the true cost of employment beyond the gross salary. Includes employer National Insurance at 15%, pension contributions, and Employment Allowance eligibility.

£
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Auto-enrolment minimum is 3% employer contribution

Pension calculated on

Qualifying earnings: £6,240 to £50,270

Employer cost breakdown

ComponentAnnualMonthly
Gross salary£30,000£2,500
Employer NI (15%)£3,750£313
Employer pension (3%)£713£59
Total employer cost£34,463£2,872

Where the money goes

Based on an England/Wales employee with standard tax code 1257L, no student loans, no employee pension

RecipientAnnual% of cost
Employee take-home£25,12072.9%
Government(tax + employee NI + employer NI)£8,63025.0%
Employer pension pot£7132.1%
Total employer cost£34,463100%

Total employer cost

£34,463

per year

Gross salary£30,000
Employer NI+£3,750
Employer pension+£713
Total cost£34,463

Above gross

+£4,463

Per month

£2,872

At a glance

Employer pays£34,463
Employee receives£25,120
Difference£9,343

For every £1 the employee takes home, the employer spends £1.37
Mottalib Radif, personal finance expert at Real Salary

Written by Mottalib Radif

MBA INSEAD · Finance Enthusiast

Updated for 2026/27 tax year

How Employer Costs Work in the UK

When hiring an employee in the UK, the gross salary is only part of the cost. Employers must also pay employer National Insurance contributions on top of the gross salary, and make pension contributions under auto-enrolment. Together, these additional costs typically add 14% to 19% to the headline salary figure, depending on the salary level and pension scheme.

The three components of total employer cost are:

  1. Gross salary — the headline figure agreed with the employee.
  2. Employer National Insurance — a tax on the employer, charged at 15% on all earnings above £5,000 per year.
  3. Employer pension contribution — a minimum of 3% of qualifying earnings under auto-enrolment rules.

Understanding the true cost of employment is essential for budgeting, headcount planning, and negotiating salaries. A role advertised at £40,000 actually costs the employer over £46,000 when employer NI and pension are included.

Employer National Insurance 2026/27

Employer NI is charged at 15% on all employee earnings above the secondary threshold of £5,000 per year. This rate took effect in April 2025 (increased from 13.8%) and continues into the 2026/27 tax year.

A critical difference from employee NI: there is no upper earnings limit for employer NI. While employees pay a reduced 2% NI rate above £50,270, employers continue to pay the full 15% on all earnings above the threshold, no matter how high the salary. This makes employer NI particularly significant for high earners. On a £100,000 salary, employer NI alone is £14,250.

Employer NI is not deducted from the employee's pay — it is an additional cost borne entirely by the employer. However, economists widely agree that employer NI is effectively passed on to employees through lower wages than would otherwise be offered.

Employer Pension Contributions

Under auto-enrolment, employers must contribute a minimum of 3% of qualifying earnings to eligible employees' workplace pensions. Qualifying earnings are the portion of salary between £6,240 and £50,270 per year for 2026/27.

For example, on a £30,000 salary, qualifying earnings are £23,760 (£30,000 minus £6,240), and the minimum employer pension contribution is £713 per year (3% of £23,760).

Many employers choose to contribute more than the 3% minimum, or to calculate pension contributions based on the full gross salary rather than qualifying earnings. This calculator lets you adjust both the percentage and the calculation basis to match your specific scheme.

Employment Allowance

The Employment Allowance lets eligible employers reduce their employer NI bill by up to £10,500 per year. It is claimed through payroll software and reduces the employer NI due each pay period until the allowance is used up.

Not all employers qualify. The Employment Allowance is not available to:

For eligible small businesses, the Employment Allowance can eliminate employer NI entirely on lower salaries. For example, a £30,000 salary generates £3,750 in employer NI, which is fully covered by the £10,500 allowance.

Employer Cost Examples

The table below shows the total annual cost to an employer at common salary levels, assuming the minimum 3% employer pension on qualifying earnings and no Employment Allowance:

Gross Salary Employer NI Pension (3%) Total Cost
£25,000 £3,000 £563 £28,563
£30,000 £3,750 £713 £34,463
£40,000 £5,250 £1,013 £46,263
£50,000 £6,750 £1,313 £58,063
£75,000 £10,500 £1,321 £86,821
£100,000 £14,250 £1,321 £115,571

At lower salary levels the additional costs represent around 14-15% on top of the gross salary. At higher salaries the percentage rises because employer NI has no cap, while pension contributions are limited to qualifying earnings up to £50,270.

Sources

For a complete overview of all tax rates and thresholds this year, see our UK Tax Year 2026/27 guide.

Frequently Asked Questions

How much does it cost to employ someone on £30,000?

On a gross salary of £30,000, the employer also pays approximately £3,750 in employer National Insurance and £713 in minimum pension contributions (3% of qualifying earnings). The total cost to the employer is roughly £34,463 per year, around 15% above the headline salary.

What is employer National Insurance?

Employer National Insurance is a separate tax paid by the employer on top of the employee's gross salary. From April 2025, the rate is 15% on all earnings above the secondary threshold of £5,000 per year. Unlike employee NI, there is no upper earnings limit — employers pay 15% on all earnings above the threshold with no cap.

What is the Employment Allowance?

The Employment Allowance is a £10,500 annual reduction in employer National Insurance for eligible businesses. It effectively means the first £10,500 of employer NI is written off. However, it is not available to companies where the only employee is a director, or to public sector employers. Eligible businesses can claim it through their payroll software.

Do all employers have to pay pension contributions?

Under auto-enrolment rules, employers must contribute a minimum of 3% of qualifying earnings to eligible employees' pensions. Qualifying earnings are between £6,240 and £50,270 per year for 2026/27. Some employers choose to contribute more, or calculate pension on the full salary rather than just qualifying earnings.

How much is employer NI in 2026/27?

Employer NI is 15% on earnings above the secondary threshold of £5,000 per year. There is no upper limit. For example, on a £50,000 salary, employer NI is £6,750 (15% of £45,000). This rate has been in effect since April 2025 and applies for the 2026/27 tax year.