HomeEmployer Cost Calculator

Employer Cost
Calculator 2026/27

See what it costs to employ someone in 2026/27: their pay, employer National Insurance and pension, less any Employment Allowance. Start from the gross pay or from the take-home pay you have agreed.

Tax year 2026/27

The amount is

Pay before tax and other deductions

Amount is per

Employers pay no National Insurance on the first £50,270 a year for under-21s and apprentices under 25
The minimum is 3% from the employer and 5% from the employee, on earnings from £6,240 to £50,270 a year
Leave blank for 5%. Taken from pay before income tax (net pay arrangement).
Most businesses can, up to £10,500 a year. If you employ a nanny or other household staff you usually cannot, unless they are a care or support worker.

What employers pay on top of salary

When you employ someone, the salary is not the whole cost. On top of their gross pay you usually pay:

Income tax, employee National Insurance, the employee's pension contribution and any student loan are taken from the employee's pay through PAYE. You pass them to HMRC or the pension scheme, but they come out of the gross pay, so they do not add to your cost.

Worked example

You pay someone aged 21 or over a gross salary of £30,000 in England, with the auto-enrolment minimum pension and no Employment Allowance.

The employee pays 5% of £23,760 (£1,188) into the pension, plus £3,248.40 income tax and £1,394.40 National Insurance, and takes home £24,169.20.

Employer National Insurance explained

Employer National Insurance (secondary Class 1 contributions) is 15% of each employee's pay above the secondary threshold of £5,000 a year. Payroll works it out each pay period, so the threshold is £96 a week or £417 a month. There is no upper limit, so it keeps rising with pay.

For employees under 21 and apprentices under 25, you pay 0% on pay up to £50,270 a year (£967 a week), then 15% above that. You use a different National Insurance category letter for them in payroll: M for under-21s and H for apprentices under 25.

Employment Allowance

Employment Allowance lets eligible employers cut their employer National Insurance bill by up to £10,500 in the 2026/27 tax year. It is one allowance for the whole business, not per employee. If your employer National Insurance for the year is less than £10,500, the allowance only covers what you owe; you do not get the difference back.

Most businesses and charities can claim. You cannot claim if:

You also cannot count someone you employ for personal, household or domestic work, such as a nanny or gardener, unless they are a care or support worker. You claim through your payroll software each tax year.

Workplace pension minimums

You must automatically enrol workers into a workplace pension if they are aged 22 to State Pension age, earn at least £10,000 a year and usually work in the UK. For 2026/27, the minimum contributions are worked out on qualifying earnings, which is pay between £6,240 and £50,270 a year:

Workers who are not automatically enrolled, such as under-22s, can ask to join. If they earn more than £520 a month (£120 a week), you must then pay at least the minimum too. Your scheme's rules may use a different measure of pay, or ask for more.

This calculator takes the employee's pension from their pay before income tax, as a net pay arrangement. Many schemes use relief at source instead, where the employee pays 4% from their taxed pay and the scheme adds 1% tax relief. The employer's cost is the same either way.

Employing a nanny or household staff

If you employ a nanny, a housekeeper or other staff in your home, you are their employer. You run payroll, take off their income tax and National Insurance, and pay employer National Insurance on top. You will usually need to put them in a workplace pension too. You normally cannot claim Employment Allowance for household staff, so set that option to No (unless they are a care or support worker).

Gross or net pay agreements

Many families agree a weekly or monthly take-home figure with their nanny, such as £600 a week net. That is a net pay agreement. Choose "Agreed take-home pay" above and the calculator works out the gross pay that gives that amount, and what it costs you in total.

With a net agreement, you carry the risk. If income tax, National Insurance or pension rates change, or the employee's tax code changes, the gross pay needed to keep their take-home the same changes too, and so does your cost. With a gross agreement, a change in the employee's deductions changes their take-home instead. Either way, the contract should say clearly which one you have agreed.

Registering as an employer

You normally need to register as an employer with HMRC before the first payday, and you cannot register more than 2 months before you start paying someone. Read Register as an employer (GOV.UK). If you are not sure about your duties, you may want to check with HMRC or an accountant.

Related calculators

Working from an agreed salary the other way? The net to gross calculator finds the gross pay for a take-home target. The National Insurance calculator shows employee and employer NI on any salary, and the take home pay calculator shows what an employee keeps. For pension choices see the pension calculator, and for paid leave the holiday entitlement calculator.

How this is worked out

We turn the amount into a yearly figure (monthly × 12, weekly × 52), then work out employer National Insurance, employer pension and any Employment Allowance on that gross pay. If you enter take-home pay, we try different gross amounts, work out the employee's income tax, National Insurance, pension and student loan on each, and narrow down until the take-home matches to within a penny.

What this calculator assumes

  • The 2026/27 tax year, one employee paid the same amount every pay period for the whole year, worked out on yearly thresholds.
  • The employee has tax code 1257L, no other income and no benefits in kind, with England, Wales and Northern Ireland or Scottish income tax rates, as you choose.
  • Auto-enrolment minimum: 3% employer and your chosen employee rate on pay from £6,240 to £50,270, only if pay is at least £10,000 a year and the employee is not under 21. Custom rates are a percentage of gross pay.
  • The employee's pension is taken before income tax (net pay arrangement), unless you tick salary sacrifice under More options. Then the employee's pension amount comes off their cash pay and you pay it into the pension, so income tax, employee and employer National Insurance and student loan are worked out on the lower cash pay. Salary sacrifice must not take cash pay below the minimum wage.
  • Other costs you enter are added to the yearly total as they are. Cost per hour is the yearly total divided by 52 weeks of the hours you enter (paid holiday counts as hours paid). The minimum wage check is against the National Living Wage of £12.71 an hour for workers aged 21 or over only.
  • Employment Allowance, if chosen, is set against this employee's employer National Insurance only, up to £10,500.
  • Not included: the Apprenticeship Levy, Freeport, Investment Zone and veterans' reliefs, benefits in kind, statutory pay such as sick or maternity pay, and costs like holiday cover, training or payroll fees unless you add them as other costs.

Sources

Rates checked against GOV.UK on 12 October 2026. Read how we calculate or tell us about a mistake.

Frequently asked questions

For someone aged 21 or over, employer National Insurance is (£30,000 − £5,000) × 15% = £3,750, so the cost is £33,750 before any pension. With the auto-enrolment minimum pension of 3% of qualifying earnings (£712.80), the total is £34,462.80 a year. Employment Allowance can reduce this if you can claim it.

Usually not. You cannot include someone you employ for personal, household or domestic work, such as a nanny or gardener, unless they are a care or support worker. So most families employing a nanny pay the full employer National Insurance.

Not on most of their pay. For employees under 21 and apprentices under 25, the employer rate is 0% on pay up to £50,270 a year (£967 a week). Above that you pay 15%, the same as for other employees.

If a worker is automatically enrolled, you must pay at least 3% of their qualifying earnings, which for 2026/27 is pay between £6,240 and £50,270 a year. The employee pays 5%, so at least 8% goes in. Workers are automatically enrolled if they are aged 22 to State Pension age and earn at least £10,000 a year.

A gross salary is pay before tax and other deductions. A net salary is the take-home amount. If you agree a net salary, you pay whatever gross is needed to reach it, so any rise in the employee's tax, National Insurance or pension contributions comes out of your pocket rather than theirs.

With salary sacrifice, the employee gives up part of their pay and you pay that amount into their pension instead. Neither of you pays National Insurance on it, so you save 15% employer National Insurance on the amount sacrificed (if their pay is above £5,000 a year). For example, on a £30,000 salary with the auto-enrolment minimum, the employee's £1,188 pension by salary sacrifice saves you £178.20 a year and saves the employee £95.04 in National Insurance. Cash pay must not fall below the minimum wage.