UK employer NI cost.
Employer NI cost
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True cost of employment
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Your breakdown
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The cost of an employee that never appears on the payslip
When you hire someone, their salary is only part of what they cost you. On top sits employer's National Insurance, a charge the business pays that the employee never sees. It is Class 1 secondary NIC, levied at 13.8 percent on earnings above the Secondary Threshold. For 2026/27 that threshold sits at £5,000, well below the employee's own starting point, so employer NI kicks in early and adds meaningfully to the true cost of every hire. This calculator turns a gross salary into that hidden cost and shows the full amount the employee actually costs the business.
It matters because budgeting on salary alone understates payroll by a tenth or more. The 13.8 percent rate is the same whatever the salary, but because the first £5,000 is exempt, the effective burden as a percentage of pay creeps up the more someone earns. There is no upper limit on employer NI the way there is for the employee charge, so it keeps applying right up the scale.
Pricing a £50,000 hire
Take an employee on a £50,000 salary. The Secondary Threshold of £5,000 is exempt, leaving £45,000 chargeable. At 13.8 percent that produces £6,210 of employer National Insurance. Add that to the salary and the true annual cost of employing this person is £56,210, before pension contributions, equipment, or any other on-costs.
The stacked bar shows the salary the employee receives and the NI surcharge the business carries on top. The £6,210 is roughly 12 percent on top of headline pay.
The Employment Allowance, and who gets it
Many smaller employers can knock a large chunk off this bill through the Employment Allowance, which for 2026/27 is worth up to £10,500 a year set against the secondary NI liability. Tick the box in the calculator and it deducts the allowance from the charge. For a single £50,000 employee the allowance more than covers the £6,210, reducing the employer NI to nil. The catch is eligibility. The allowance is aimed at genuine small businesses and charities, and a company whose only employee is also its sole director generally cannot claim it. There are also rules excluding employers whose secondary NI bill exceeded £100,000 in the previous year.
How does salary sacrifice cut this bill?
Because employer NI is charged on gross pay, anything that reduces gross pay reduces the charge. When an employee sacrifices salary into a pension, the sacrificed amount is no longer salary, so the employer saves 13.8 percent on it as well as the employee saving their own NI and income tax. Many employers pass some or all of that 13.8 percent saving into the pension, which is why salary sacrifice pensions are so much more efficient than ordinary contributions. The same logic applies to electric car schemes and the cycle to work scheme.
Do I pay employer NI on someone under 21 or an apprentice?
Often not up to a point. There is a zero rate of employer NI on earnings up to the Upper Secondary Threshold for employees under 21 and for apprentices under 25, and similar reliefs exist for veterans and in investment zones. This calculator uses the standard threshold, so for those specific groups your real employer NI may be lower than shown until their pay exceeds that higher threshold.