What employer NI rate does the calculator use for 2026/27?

The default input is 15%, applied to salary above the £5,000 annual Secondary Threshold. Some employees, reliefs and NI category letters are treated differently, so verify the rate that applies to your payroll.

How does a National Minimum Wage increase affect total employment costs?

When the National Living Wage rises, employer costs increase by more than the wage uplift alone. Higher gross pay means additional National Insurance above the secondary threshold, and the employer pension contribution also rises as it is based on qualifying earnings. For a small business with several low-paid staff, a 10% wage increase can push total costs up by 12–15%. The employee cost calculator lets you model different salary levels to plan accurately before each April uplift.

Employee Cost Calculator – True Cost to Employer UK

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Employee Cost Calculator · UKBusiness & Freelance

Example result based on the prefilled values.

Employer NI

£3,750.00

Pension

£900.00

Total Cost

£35,150.00

On-Cost

17.17%

Continue your plan

Useful next calculations

Related to this calculation

Use the Profit Margin Calculator

Continue with the related business & freelance question this result raises.

Use the Break-Even Calculator

Continue with the related business & freelance question this result raises.

Rates & sources2026/27

Illustrative employer cost using the Category A employer National Insurance rate and secondary threshold for 2026/27. It does not model Employment Allowance, category-specific reliefs, benefits or payroll timing.

Employer NI rate15%

Secondary threshold£5,000 a year

Employment Allowancenot modelled

Source: HMRC — 2026/27 employer rates and thresholds — source checked for 2026/27.

When to use this calculator

Before pricing a job, setting margin targets, or reviewing hiring costs.
When you want to test sensitivity around volume, VAT, markup, or overhead changes.
When you need a practical estimate before committing to a budget or proposal.
When you are modelling break-even volume and want to see how it shifts as overheads or prices change.
When you are preparing a quote and need to verify that the margin holds after materials, labour, and VAT are accounted for.

A realistic UK planning example

Use these sample inputs as a quick scenario test, then change one variable at a time to compare outcomes.

Annual Salary (£)

£35,000

Employer NI Rate (%)

Employer Pension (%)

Other Annual Benefits (£)

500

After entering these figures, review employer ni, pension and total cost together rather than in isolation — each metric tells a different part of the story. Then rerun the tool with one input adjusted to see which variable has the biggest effect on all three outputs before you settle on a plan.

How to read your results

Employer NI

Use this metric to compare scenarios side by side and understand how changes in the key inputs drive the final outcome. If the figure surprises you, isolate one variable at a time and rerun the calculation to identify which assumption is responsible.

Pension

Total Cost

This is the headline outcome of the calculation, but it is most useful when read alongside the supporting metrics below it rather than in isolation. Try changing one input at a time and watching how this total moves to understand which driver has the biggest impact.

On-Cost

Method & assumptionsAuthoritative sources

This calculator estimates the annual cost of employing one member of staff using the salary, employer National Insurance rate, pension percentage and other benefits you enter. Its employer NI estimate applies the entered rate to salary above the £5,000 annual Secondary Threshold used for 2026/27. The pension line applies your entered percentage to the full salary, so it is a planning assumption rather than an automatic-enrolment compliance calculation.

The result does not apply Employment Allowance, NI category-letter exceptions, qualifying-earnings pension bands, recruitment costs, equipment or other payroll adjustments. Check your payroll setup and the current GOV.UK employer rates before making a hiring or budget decision.

Common mistakes

!Using optimistic assumptions without testing a more cautious scenario as well.
!Comparing outputs from different tools without checking that the inputs match.
!Treating the result as a final quote instead of a planning estimate.
!Forgetting to include employer National Insurance contributions when modelling the true cost of a new hire.
!Using revenue figures in place of gross profit when calculating margin percentage, which produces a misleadingly high result.

What to do next

Try at least one more scenario with a lower price or higher cost so you can see the margin floor.
Use the related calculators below to cross-check VAT, payroll, or break-even figures from another angle.
Open one of the linked guides if you need more context before you finalise a quote or budget.
If the margin is tighter than expected, identify which single input has the biggest impact and focus any negotiation there first.
Keep a record of the assumptions behind this estimate so you can revisit and update it when costs or volumes change.

Frequently asked

The total depends on salary, the employee's National Insurance category, pension basis and benefits. For 2026/27, the standard employer NI rate is 15% above the £5,000 annual Secondary Threshold, before reliefs or category-specific rules. Use the inputs to model your own pension and benefits assumptions.

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