UK Employer Cost Calculator

See the estimated annual and monthly cost of an employee, including employer National Insurance and pension contributions. Find out what someone could cost your business beyond their salary.

Free, no sign-up, no email, no card
Rules: 2026/27 (6 April 2026 – 5 April 2027)

Runs entirely in your browser — nothing you enter is sent anywhere or stored. Rules last checked against the official sources on 5 October 2026.

An estimate for information only — not legal, tax, payroll, pension or financial advice. Read the disclaimer.

Your employee

Annual gross salary

Enter the employee’s annual gross salary before deductions.

Employee age

Enter 16 to 100. Age can affect the employer National Insurance category. Source: HMRC NI category rates (opens in a new tab)

Employee type

Select the category that applies to the employee. Special National Insurance categories have eligibility conditions beyond age alone. Sources: HMRC NI category rates (opens in a new tab), HMRC NI Manual NIM01307 (opens in a new tab), HMRC veterans relief (PAYE70223) (opens in a new tab)

Standard employeeNormal employer Class 1 National Insurance.Employee under 21Category M: 0% employer NIC up to £50,270.Apprentice under 25Category H: under 25 and on an approved apprenticeship standard or framework.Qualifying veteranCategory V: first 12 months of their first civilian job after the regular armed forces.

Employer pension contribution

Enter the percentage of pensionable pay the employer contributes. 0 to 100, up to 2 decimal places.

Estimated employer cost

2026/27 tax year

£46,262.80 a year

£3,855.23 a month

Estimated additional employer cost above salary: £6,262.80 a year

Breakdown of the estimated employer cost
Cost	Annual	Monthly
Gross salary	£40,000.00	£3,333.33
Employer National Insurance	£5,250.00	£437.50
Employer pension	£1,012.80	£84.40
Estimated total employer cost	£46,262.80	£3,855.23

Monthly figures are each annual figure divided by 12, so a column can differ from the sum of its rows by a penny.

Employer NIC as % of salary: 13.1%
Employer pension as % of salary: 2.5%
Additional cost above salary: 15.7%

Rates and thresholds can change each tax year. Check the applicable tax year before using this estimate for payroll decisions. Source: HMRC rates 2026/27 (opens in a new tab)

Estimate only, not advice. MadyHR.ai is not a solicitor, accountant or financial adviser and accepts no responsibility for decisions based on this figure. Read the full disclaimer.

How we calculated this

Employer National Insurance

15% of earnings above the £5,000 secondary threshold. Sources: HMRC rates 2026/27 (opens in a new tab), HMRC NI category rates (opens in a new tab)

£40,000.00 salary
− £5,000 secondary threshold
= £35,000.00 subject to employer NIC
£35,000.00 × 15% = £5,250.00

Employer pension

Qualifying earnings are pay between £6,240 and £50,270 for 2026/27. Source: The Pensions Regulator thresholds (opens in a new tab)

£40,000.00 salary
− £6,240 lower qualifying earnings limit
= £33,760.00 qualifying earnings
£33,760.00 × 3% = £1,012.80

Total

£40,000.00 salary
+ £5,250.00 employer NIC
+ £1,012.80 employer pension
= £46,262.80 a year, or £3,855.23 a month

Each figure is worked out exactly and rounded to the penny only for display. Payroll works out NIC for each pay period, so a real payslip can differ. Source: HMRC CWG2 2026/27 (opens in a new tab)

This is an estimate based on the inputs provided and does not represent the employer’s complete payroll or total employment overhead. It leaves out employer-level reliefs such as Employment Allowance. Source: GOV.UK Employment Allowance (opens in a new tab)

How this calculator works

This calculator estimates the cost of employing one employee using the annual gross salary, employee category and employer pension contribution you enter. It currently focuses on employer Class 1 National Insurance and employer pension contributions.

Employer National Insurance

Standard employer Class 1 secondary NIC is 15% of earnings above the £5,000 secondary threshold for 2026/27. Source: HMRC rates 2026/27

Qualifying employees under 21 (category M), qualifying apprentices under 25 (category H) and qualifying veterans (category V) have a 0% employer rate up to the relevant upper secondary threshold, £50,270 for 2026/27, and 15% above it. Source: HMRC NI category rates An apprentice must also be on an approved UK government apprenticeship standard or framework, and the employer needs evidence of this. Sources: HMRC NI Manual NIM01307, HMRC NI Manual NIM01310

Veteran relief applies for 12 consecutive months from the first day of a veteran’s first civilian job after leaving the regular armed forces, and HMRC says the relief is available until 5 April 2028. Sources: HMRC veterans relief (PAYE70223), HMRC NI Manual NIM01405 The calculator assumes the whole year falls inside the qualifying period; if only part of it does, the real figure will be higher.

Workplace pension

For standard automatic-enrolment minimum contributions, qualifying earnings are pay between £6,240 and £50,270 for 2026/27. Source: The Pensions Regulator thresholds

3% is the minimum employer contribution required under the standard automatic-enrolment minimum contribution rules for qualifying earnings where those rules apply. Your pension scheme may use a different pensionable-pay definition or higher contribution rate. Source: GOV.UK workplace pensions

Whether an employee must be automatically enrolled depends on their age and earnings: the earnings trigger is £10,000 for 2026/27 (the law’s test is earnings of more than that), and the age range is 22 to State Pension age. Sources: GOV.UK who to enrol, Pensions Act 2008 s3, DWP thresholds review 2026/27 This calculator doesn’t decide eligibility. If the employee won’t be in a scheme, set the employer pension to 0%.

What is not included

Employment Allowance. Employment Allowance may reduce an eligible employer’s overall employer National Insurance liability (up to £10,500 for 2026/27), but it is not deducted from this individual employee estimate because eligibility and use depend on the employer’s wider payroll and circumstances. Source: GOV.UK Employment Allowance
Apprenticeship Levy. Not included because it is based on an employer’s overall annual pay bill and circumstances rather than simply this employee’s salary. For 2026/27 it applies where the pay bill is over £3,000,000, at 0.5% with a £15,000 allowance. Sources: HMRC rates 2026/27, GOV.UK Apprenticeship Levy
Employee Income Tax, employee National Insurance and employee pension contributions, which come out of the salary rather than adding to the employer’s cost. Sources: GOV.UK PAYE for employers, GOV.UK workplace pensions
Bonuses, commission, overtime, benefits in kind, salary sacrifice, statutory payments, recruitment, equipment and other overheads.
Pay-period effects. Payroll works out NIC each pay period using period thresholds (for example £417 a month), so a real payroll can differ slightly from an annual estimate, especially when pay varies month to month. Sources: HMRC CWG2 2026/27, HMRC rates 2026/27

One handshake, two sides.

The M in our logo is two people shaking hands: an employer and the person they hire. We build software for both of them: MadyHR.ai for employers, MadyJobSearch.com for job seekers, and the useful parts are free.

For employers

Managing employees beyond the spreadsheet?

MadyHR.ai helps UK employers manage HR tasks, employee records, compliance reminders, holiday tracking and sponsor compliance in one place. It works alongside the payroll you already use; MadyHR.ai doesn’t run payroll.

Free account, no card, no sales call. Set your company up in about a minute and look round the whole product.
£50 a year for unlimited employees, or £240 once for ten years at a price that cannot change.

Create free account See pricing

Free tools like this one stay free, with no email asked for.

For job seekers and employers100% free

Hiring your next employee?

Ready to turn your hiring budget into a real vacancy? Post your UK job on MadyJobSearch.com for free. Looking for your next UK job instead? Search and apply free too.

100% free, for job seekers and for employers. No fees to search, apply or post, from the same company as MadyHR.ai.
AI-powered job search: roles matched to the person, not to a list of keywords.

Visit MadyJobSearch.com

Official sources

Every rule and figure this calculator uses comes from the legislation and official guidance below. All links were checked on 5 October 2026.

Employer National Insurance

HMRC: Rates and thresholds for employers 2026 to 202715% employer rate, £5,000 secondary threshold, £50,270 upper secondary thresholds, Employment Allowance, Apprenticeship Levy
HMRC: Rates and thresholds for employers 2026 to 2027: employer contribution rates by category letterCategory letters M (under 21), H (apprentice under 25) and V (veteran) and their 0% employer bands
HMRC: National Insurance Manual NIM01307: abolition of secondary NICs for apprentices under 25, definitionWhat counts as a qualifying apprenticeship in England, Wales, Scotland and Northern Ireland
HMRC: National Insurance Manual NIM01310: apprentices under 25, category lettersThe employer checks the date of birth and that the apprenticeship qualifies, and holds the evidence
HMRC: PAYE Manual PAYE70223: National Insurance relief for employers who hire veteransWho is a qualifying veteran and the 12-month qualifying period
HMRC: National Insurance Manual NIM01405: zero rate for armed forces veteransRelief available until 5 April 2028; 0% up to the Veterans Upper Secondary Threshold
HMRC: 2026 to 2027: Employer further guide to PAYE and National Insurance contributions (CWG2)How payroll works out National Insurance for each pay period

Workplace pensions

GOV.UK: Workplace pensions: what you, your employer and the government pay3% minimum employer contribution; schemes can define earnings differently
GOV.UK: Set up and manage a workplace pension scheme: who you must enrolAutomatic enrolment depends on age (22 to State Pension age) and earnings
legislation.gov.uk: Pensions Act 2008, section 3: automatic enrolmentAged at least 22, under State Pension age, and earnings of more than £10,000 a year
The Pensions Regulator: Automatic enrolment earnings thresholdsQualifying earnings band £6,240 to £50,270 for 2026/27
DWP: Review of the automatic enrolment earnings trigger and qualifying earnings band for 2026/27£10,000 earnings trigger and the qualifying earnings band kept for 2026/27

Employer-level reliefs and payroll

GOV.UK: Claim Employment AllowanceWhy Employment Allowance is an employer-level relief
GOV.UK: Pay Apprenticeship LevyWhy the levy is not part of a single employee's cost
GOV.UK: PAYE and payroll for employersEmployee income tax and National Insurance are deducted from the employee's pay

Questions and answers

What is the employer cost of a £40,000 employee?

With the calculator’s starting settings (a standard employee aged 30, with a 3% employer pension on qualifying earnings), a £40,000 employee is estimated to cost £46,262.80 a year in 2026/27, about £3,855.23 a month: £5,250.00 employer National Insurance and £1,012.80 employer pension on top of the salary.

Change the details in the calculator above to see the estimate for a different salary, age, employee type or pension rate.

Sources: HMRC rates 2026/27, The Pensions Regulator thresholds

How much National Insurance does an employer pay?

For 2026/27, employers pay Class 1 secondary National Insurance of 15% on each employee’s earnings above the secondary threshold of £5,000 a year (£96 a week or £417 a month). For qualifying employees under 21, apprentices under 25 and veterans in their first 12 months of civilian work, the rate is 0% up to £50,270 a year and 15% above that.

Sources: HMRC rates 2026/27, HMRC NI Manual NIM01307, HMRC NI Manual NIM01405

Does the employer pay pension contributions?

Where the automatic-enrolment rules apply, the employer must pay at least 3% of the employee’s qualifying earnings (£6,240 to £50,270 a year for 2026/27). Whether an employee has to be enrolled depends on their age and earnings, and a scheme can use a different definition of pay or a higher rate.

Sources: GOV.UK workplace pensions, The Pensions Regulator thresholds, GOV.UK who to enrol

Does Employment Allowance reduce the result?

No. Employment Allowance is an employer-level relief of up to £10,500 a year off an eligible employer’s total employer National Insurance bill. Whether you can claim it, and how much of it is left, depends on your whole payroll, so it isn’t taken off a single employee’s estimate.

Source: GOV.UK Employment Allowance

Does this calculator include the employee’s tax?

No. This calculator focuses on the employer’s estimated salary, employer National Insurance and employer pension contribution. The employee’s Income Tax and National Insurance are deducted from their pay through PAYE, so they don’t add to what the employer pays.

Source: GOV.UK PAYE for employers

Is this calculator official?

No. It is an independent MadyHR.ai tool that uses official published government guidance as the basis for its calculations. It is not affiliated with or endorsed by HMRC, GOV.UK, the Department for Work and Pensions or The Pensions Regulator.

Important: please read

Estimate only. This calculator provides an estimate for information purposes only. It is not payroll, tax, pension, legal, financial or employment advice and is not a substitute for payroll software, HMRC guidance, The Pensions Regulator guidance, an accountant, payroll professional or qualified adviser. Results depend on the information entered and the assumptions used by the calculator. Actual employer National Insurance and pension costs can differ because of employee category, pay frequency, bonuses, commission, overtime, benefits, pension scheme rules, statutory payments, employer-level reliefs and other circumstances. Always verify the applicable rules before making payroll or employment decisions.

MadyHR.ai is HR software. It is not a firm of solicitors, accountants, tax advisers, payroll providers or financial advisers, and it is not authorised or regulated by the Solicitors Regulation Authority or the Financial Conduct Authority. It does not provide legal, tax, pension, payroll or financial advice, and using this calculator does not create an adviser–client relationship.

Every rule on this page is linked to the official source it comes from. Those sources, not this page, are the authority: if they say something different, follow them. Figures are estimates and may contain errors or become out of date.

To the fullest extent permitted by law, MadyHR.ai accepts no responsibility or liability for any loss, cost, penalty or claim arising from use of, or reliance on, this calculator or its results. Nothing in this disclaimer excludes or limits any liability that cannot be excluded or limited by law. See also our resources disclaimer.

This calculator is not affiliated with or endorsed by HM Revenue & Customs, GOV.UK, the Department for Work and Pensions or The Pensions Regulator.

Take-home salary calculatorPay after Income Tax, National Insurance, pension and student loan, 2026/27.
Redundancy pay calculatorStatutory redundancy pay from age, service and weekly pay.
Notice pay calculatorStatutory and contractual notice, notice pay and pay in lieu.
Sick pay calculatorStatutory Sick Pay week by week under the 2026/27 rules.
Holiday entitlement calculatorStatutory holiday for any working pattern, starters and leavers.
Minimum wage checkerHourly or salaried pay against the minimum wage, and any underpayment.

This calculator estimates one employee’s employer National Insurance and employer pension under the 2026/27 rules. It is an independent MadyHR.ai tool based on official sources, not payroll or tax advice. Thinking of sponsoring a Skilled Worker? Try the sponsor licence cost calculator, or see all free HR tools.

UK Employer Cost Calculator

Your employee

Estimated employer cost

Employer National Insurance

Employer pension

Total

How this calculator works

Employer National Insurance

Workplace pension

What is not included

One handshake, two sides.

Managing employees beyond the spreadsheet?

Hiring your next employee?

Official sources

Employer National Insurance

Workplace pensions

Employer-level reliefs and payroll

Questions and answers

Important: please read

More free tools

Cookies on this site