Employer Cost Calculator United Kingdom
This employer cost calculator shows the 2026/27 cost of a hire: gross salary, plus employer NI at 15% above £5,000, plus the employer pension contribution.
What it does
The Employer Cost Calculator shows the true cost of a hire for 2026/27 — the gross salary plus employer (secondary) Class 1 National Insurance on pay above the £5,000 secondary threshold, plus your employer pension contribution.
Data sources & parameters
The figures below drive this calculator. We keep them aligned with the latest official guidance, and each result recalculates automatically whenever a value changes.
| Parameter | Value | Source | Last updated |
|---|---|---|---|
| Employer (secondary) Class 1 National Insurance rate | 0.15 | gov.uk | Effective 2026-04-06 |
| Employer secondary NI threshold (per year) | 5,000 | gov.uk | Effective 2026-04-06Verified 2026-09-06 against HMRC rates and thresholds for employers 2026 to 2027: secondary threshold GBP 96 a week, GBP 417 a month, GBP 5,000 a year. |
We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.
The formula
Employer NI = max(0, salary − £5,000) × 15%; Employer pension = salary × pension %; Total cost = salary + employer NI + employer pension
How it works
It charges employer NI at 15% on the part of the salary above the secondary threshold, adds your chosen employer pension percentage of the gross salary, and sums both on top of the salary to give the total annual cost of employing someone.
Where it is used
- Budgeting the full cost of a new hire
- Comparing a headline salary with its real payroll cost
- Pricing contractor versus employee arrangements
Worked example
A £35,000 salary with a 3% pension really costs … — … in employer NI and … in pension on top.
The salary on an offer letter is only part of what a UK hire costs. On top of gross pay, an employer pays secondary Class 1 National Insurance and, under auto-enrolment, a workplace pension contribution. This calculator adds the three together for 2026/27 so you can see the full cost before you commit.
What makes up the true cost of a hire
The first element is the gross salary, the figure you advertise and pay. The second is employer National Insurance, a payroll tax the business pays on top of wages. The third is the employer pension contribution. Together they give the total annual cost, which for most salaries is well above the advertised pay. That gap matters when you set budgets, price work or compare candidates on different salaries.
How employer National Insurance works
For 2026/27, employers pay 15% on every pound an employee earns above the secondary threshold of £5,000 a year. Nothing is due on the first £5,000, and there is no upper limit, so employer NI grows with pay. On a £35,000 salary, £30,000 is liable, giving a £4,500 NI bill. First-time employers are often surprised by this line, because it never appears on the employee’s payslip.
The employer pension contribution
Most employers must enrol eligible staff in a workplace pension and contribute to it. The legal minimum employer contribution is 3% of qualifying earnings, and many employers pay 5%, 8% or more. The calculator applies your chosen percentage to the whole gross salary to keep the maths simple; some schemes use a banded definition of qualifying earnings, so treat the figure as a close estimate rather than an exact payroll number.
A worked example
A £35,000 salary with a 3% employer pension: employer NI is 15% of £30,000, or £4,500, and the pension is 3% of £35,000, or £1,050. The total employer cost is £40,550, about 16% above the headline salary. At £50,000 with a 5% pension, employer NI is 15% of £45,000, or £6,750, the pension is £2,500 and the total is £59,250. The higher the salary, the larger the NI share, because more of the pay sits above the £5,000 threshold.
Why the true cost matters
Budgeting to the headline salary understates what a hire costs, and the shortfall grows with every person you add. When pricing a project, deciding between staff and a contractor or comparing offers, use the total employer cost. It helps in negotiation too: a candidate asking for another £3,000 of salary is asking the business for about £3,540 once employer NI and a 3% pension are added.
Assumptions and limitations
This is a planning estimate, not a payroll calculation. It uses the 2026/27 secondary Class 1 NI rate of 15% and the £5,000 secondary threshold, stored as parameters sourced from gov.uk and reviewed each tax year. It applies the pension percentage to the full gross salary rather than banded qualifying earnings, and it does not model the Employment Allowance, the apprenticeship levy, benefits in kind, or equipment and workspace costs. For an exact figure, use payroll software or ask your accountant.
About This Employer Cost Calculator
Use this employer cost calculator to get an instant, accurate estimate. The figures follow official GOV.UK guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.
Tax year 2026
Frequently asked questions
What is the real cost of employing someone in 2026/27?
How is employer National Insurance calculated?
What is the £5,000 secondary threshold?
Does the employer pension contribution count towards the cost?
Does this calculator include the Employment Allowance?
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