For the 2026 to 2027 tax year, a UK employer pays National Insurance of 15% on each employee's pay above £5,000 a year*. On top of that, the law sets a minimum pension payment of 3% on a band of earnings*. Put together, these two costs add about 14% to 16% to the salary you agree.
In pounds, that is about £3,563 a year on a £25,000 salary and about £15,571 on a £100,000 salary. The full table is below, with the sums shown so you can check them. After that, we explain the Employment Allowance, which can cut your bill by up to £10,500 a year*, and show the point where it runs out.
How does employer National Insurance work in 2026 to 2027?
Employer National Insurance is a tax you pay on your staff's pay. It is on top of the salary. It does not come out of the employee's wages. Your payroll software works it out each time you run payroll, and you pay it to HMRC with your PAYE bill.
GOV.UK's rates and thresholds for employers 2026 to 2027 sets out the numbers. Two of them matter most here.
- The secondary threshold is £5,000 a year.* That is £417 a month or £96 a week*. You pay nothing on pay up to this point.
- The rate is 15%*. For most employees (category letter A), you pay 15% on every pound above the threshold. There is no upper limit, so the bill keeps rising with pay.
So the sum for a typical employee is simple. Take the yearly salary, subtract £5,000 and multiply by 15%.
One small point. Payroll works it out each pay period, using the monthly or weekly threshold. Because £417 a month is a rounded figure, your payroll total may differ from our yearly sums by a few pounds. That is normal.
How does the minimum workplace pension work?
Every employer must offer a workplace pension and enrol eligible staff. GOV.UK's workplace pension guide for employers says you must enrol and pay in for staff aged 22 to State Pension age who earn at least £10,000 a year* and normally work in the UK.
The guide to what you, your employer and the government pay sets the legal minimum. The employer pays at least 3%* and the total, with the employee's share, must be at least 8%*.
In most schemes, that 3% is not worked out on the whole salary. GOV.UK says that in most automatic enrolment schemes, contributions are based on earnings between £6,240 and £50,270 a year*. This band is called "qualifying earnings". It means the minimum pension stops growing once pay goes above £50,270.
Your own scheme may be more generous. Some employers pay more than 3%, or work it out on the full salary. If yours does, your figures will be higher than the ones below.
What does it cost to hire at each UK salary band?
Here is the table. It shows the legal minimum on-costs for one employee on category letter A, for a full tax year.
| Salary | Employer NI (15% above £5,000) | Minimum employer pension (3%) | NI plus pension | Total yearly cost | On-costs as % of salary |
|---|---|---|---|---|---|
| £25,000 | £3,000.00 | £562.80 | £3,562.80 | £28,562.80 | 14.3% |
| £30,000 | £3,750.00 | £712.80 | £4,462.80 | £34,462.80 | 14.9% |
| £40,000 | £5,250.00 | £1,012.80 | £6,262.80 | £46,262.80 | 15.7% |
| £50,000 | £6,750.00 | £1,312.80 | £8,062.80 | £58,062.80 | 16.1% |
| £60,000 | £8,250.00 | £1,320.90 | £9,570.90 | £69,570.90 | 16.0% |
| £75,000 | £10,500.00 | £1,320.90 | £11,820.90 | £86,820.90 | 15.8% |
| £100,000 | £14,250.00 | £1,320.90 | £15,570.90 | £115,570.90 | 15.6% |
These figures use 2026 to 2027 rates* and do not take off the Employment Allowance. We cover that next.
How we worked out each cell
We used the same three steps for every row. You can repeat them for any salary.
- Employer NI. Salary minus £5,000, then times 0.15. For £40,000: £40,000 minus £5,000 is £35,000. Then £35,000 times 0.15 is £5,250.
- Minimum pension. Take the salary, or £50,270 if the salary is higher. Subtract £6,240, then times 0.03. For £40,000: £40,000 minus £6,240 is £33,760. Then £33,760 times 0.03 is £1,012.80.
- Totals. Add NI and pension to get the on-costs. Add the salary to get the total yearly cost. Divide the on-costs by the salary for the percentage.
For £60,000 and above, step 2 uses the cap. £50,270 minus £6,240 is £44,030. Then £44,030 times 0.03 is £1,320.90. That is why the pension column stops rising after £50,270.
We checked every cell twice, once by hand and once with a short script. If your number differs, check your scheme rules and your NI category letter first.
What the table tells you
A few things stand out.
First, NI is the big cost, not the pension. At £30,000, NI is more than five times the minimum pension.
Second, the percentage is not flat. It rises from 14.3% at £25,000 to a peak of about 16.1% at £50,000. Above that, the pension stops growing while NI keeps going, so the percentage falls a little. In pounds, though, the cost never stops rising.
Third, the £5,000 threshold makes NI hit lower pay harder than many people expect. Every pound of salary above £5,000 costs you £1.15 before pension.
For the wider picture, including holiday, recruitment, equipment and management time, see our guide on how to calculate the true cost of hiring an employee in the UK. This article stays with the two costs the law sets.
Who costs less in employer NI?
Some employees come with a lower NI bill. The rates page lists category letters where the employer pays 0% up to an upper secondary threshold of £50,270 a year*. These include:
- employees under 21 (letter M)
- apprentices under 25 (letter H)
- eligible veterans (letter V)
For these staff, you pay 15% only on pay above £50,270*. So an apprentice aged 19 on £22,000 would usually cost you no employer NI at all. There are also lower rates for some employees in Freeports and Investment Zones, up to a threshold of £25,000*.
These reliefs have conditions. Check them with your payroll provider before you count on them, and set the right category letter in payroll.
What is the Employment Allowance?
The Employment Allowance is a yearly amount you can take off your employer NI bill. For 2026 to 2027 it is £10,500*, according to the rates and thresholds page.
GOV.UK's guide to claiming Employment Allowance explains how it works. You pay less employer NI each time you run payroll, until the £10,500 has gone or the tax year ends, whichever is sooner.
GOV.UK's page on how to claim says you claim through your payroll software, on your Employment Payment Summary (EPS). The page on when to claim says you must claim every tax year. It is not given to you automatically.
Who can claim it?
The eligibility rules say you can claim if you are a business or charity and do less than half your work in the public sector. Since April 2025, larger employers with NI bills over £100,000 can claim too.
Who cannot claim it?
You cannot claim if:
- your company has only one director and that director is the only employee who is liable for employer NI
- you are a public body, or do more than half your work in the public sector (unless you are a charity)
A few other rules apply. If you are part of a group of connected companies, only one company in the group can claim. If you have more than one payroll, you can claim against only one of them. Some workers cannot be counted, such as people inside the IR35 off-payroll rules.
The one-director rule matters for new companies. If you are a sole director paying yourself through payroll, you usually cannot claim. Once you take on your first employee, you may become eligible. Check with your accountant.
When does the Employment Allowance run out?
This is the part most owners miss. The allowance is per employer, not per employee. Once it has gone, every extra hire costs the full NI in the table.
Here is how many employees at each salary it takes to use up £10,500 in a year.
| Salary | Yearly employer NI per person | Monthly NI per person (yearly divided by 12) | Employees it takes to use up £10,500 |
|---|---|---|---|
| £25,000 | £3,000.00 | £250.00 | 3.5 |
| £30,000 | £3,750.00 | £312.50 | 2.8 |
| £40,000 | £5,250.00 | £437.50 | 2.0 |
| £50,000 | £6,750.00 | £562.50 | 1.56 |
| £60,000 | £8,250.00 | £687.50 | 1.27 |
| £75,000 | £10,500.00 | £875.00 | 1.0 |
| £100,000 | £14,250.00 | £1,187.50 | 0.74 |
Read the last column as headroom. Three people on £25,000 use £9,000, so you would still have £1,500 left. One person on £75,000 uses the whole £10,500 alone.
Worked example: a team of four, then five
Example (hypothetical): a small agency has four staff, each on £30,000. It is eligible for the Employment Allowance and claims it from the start of the tax year in April.
- Yearly employer NI: four times £3,750 is £15,000.
- Monthly employer NI: £15,000 divided by 12 is £1,250.
- The allowance covers April to November in full. That is 8 months times £1,250, which is £10,000.
- In December, £500 of allowance is left. The agency pays £1,250 minus £500, which is £750.
- From January to March, it pays the full £1,250 each month.
- Total NI paid in the year: £750 plus three times £1,250, which is £4,500. That matches £15,000 minus £10,500.
Now the agency hires a fifth person on £30,000 from April instead.
- Yearly employer NI: five times £3,750 is £18,750.
- Monthly employer NI: £18,750 divided by 12 is £1,562.50.
- The allowance covers April to September. That is 6 months times £1,562.50, which is £9,375.
- In October, £1,125 is left. The agency pays £1,562.50 minus £1,125, which is £437.50.
- From November to March, it pays the full £1,562.50 each month.
- Total NI paid: £18,750 minus £10,500, which is £8,250.
The fifth hire added £3,750 of NI, the full amount from the table. The allowance was already used up by the first four. So for this agency, the true NI cost of the next hire is the full 15%.
Note also what happens below the line. If your total NI for the year is less than £10,500, you pay no employer NI. But GOV.UK is clear that you cannot claim a refund of the unused part.
Worksheet: what will your next hire cost you?
Use this checklist before you sign off a new role. It takes about 10 minutes with your last payroll report.
| Step | What to do | Your figure |
|---|---|---|
| 1 | Add up the yearly employer NI for your current staff (salary minus £5,000, times 15%, for each person on letter A) | £ |
| 2 | Take away £10,500 if you can claim the Employment Allowance. If the answer is below zero, that is your headroom | £ |
| 3 | Work out the new hire's yearly NI from the first table | £ |
| 4 | Take any headroom from step 2 off the figure in step 3. If headroom is bigger, the extra NI is £0 | £ |
| 5 | Add the new hire's minimum pension from the first table (or your scheme's real rate) | £ |
| 6 | Add the salary. This is the legal minimum yearly cost of the hire | £ |
| 7 | Add your other costs, such as recruitment fees, a laptop, software and desk space | £ |
Example (hypothetical): you have two staff on £25,000. Step 1 gives £6,000. Step 2 gives £4,500 of headroom. You plan to hire at £40,000, so step 3 is £5,250. Step 4 leaves £750 of extra NI. Step 5 adds £1,012.80. Step 6 brings the legal minimum yearly cost to £41,762.80.
If you hire again after that, there is no headroom left. The next hire costs the full NI.
Recruitment fees often sit in step 7 and can be large. Flink's guide on how to reduce recruitment costs without lowering quality has ideas for that line.
How do these bands compare with a hire in South Africa?
Many UK firms run these numbers and then ask what the same role costs abroad. In South Africa, employer on-costs work very differently. Our guide to South African employer costs such as UIF, SDL and COIDA explains each one.
Flink's savings calculator gives indicative yearly costs for a hire in South Africa through Flink. It also shows a typical UK salary for the same role. Here are three roles where the calculator's UK salary sits close to a band above, with the UK on-costs worked out the same way.
| Role (calculator) | Typical UK salary | UK NI plus minimum pension | UK total before other costs | Indicative yearly cost through Flink (+ VAT) |
|---|---|---|---|---|
| Customer support, 2 to 5 years | £31,200* | £4,678.80 | £35,878.80 | £21,955* |
| Executive assistant, 5+ years | £60,000* | £9,570.90 | £69,570.90 | £38,145* |
| Full stack developer, 5+ years | £84,000* | £13,170.90 | £97,170.90 | £54,336* |
The Flink figures are indicative and + VAT, from Flink's savings calculator (September 2026). A once-off setup fee also applies, and your exact quote depends on the role. The UK figures leave out the Employment Allowance and every cost outside NI and pension.
Do not stop at this table. A fair comparison also looks at how you will pay, how pay moves with the rand and what each side includes. For the method, read how to compare the total cost of UK and South African hires. If you pay in rand, our guide to managing GBP and ZAR exchange-rate risk on payroll explains your options. And for an honest test of the headline savings claims, see whether hiring in South Africa is really 40 to 60% cheaper.
For a deeper look at one high-cost role, Flink's guide to the real cost of hiring a software engineer in the UK breaks the numbers down further. Tech firms facing these bills may also find ideas in how software companies keep development costs down. Agencies can read how digital agencies keep overheads low.
Where Flink fits
Flink Remotely helps UK businesses hire skilled remote employees in South Africa. We act as recruitment partner and employer of record. We find the person, then employ them in South Africa and handle the contract, payroll and benefits there. You manage the daily work.
That means a hire through Flink is employed in South Africa, not on your UK payroll. In most cases, UK employer NI and UK auto-enrolment do not apply to that person, and you pay Flink's agreed cost instead. Your accountant should still confirm how this works for your business.
This route tends to suit roles that can be done well online, such as customer support, admin, finance, marketing and development. It suits a business that has used up its Employment Allowance and finds each new UK hire costs the full 15% on top. It may not suit you if the role needs someone on site, if you need a UK-based employee for a contract, or if you need only a few hours a month.
Every candidate is vetted through video interviews, psychometric tests and reference checks. There is no upfront cost to engage Flink. A once-off setup fee covers sourcing, onboarding, equipment and testing. Many clients onboard their new hire within a few weeks.
Before you decide, compare the full yearly cost on both sides. Check what the setup fee covers, the notice terms and what happens if a hire leaves. You still own the tasks, the goals and the feedback. We handle the employment side in South Africa.
What this means for you
Use the first table to put a real figure on every UK role you plan. Across these bands, NI and the minimum pension add about 14% to 16% to the salary. In pounds, that is from about £3,600 to over £15,500 a year per person.
Then check your Employment Allowance headroom. If your current staff already use up the £10,500, your next hire costs the full NI. Run the worksheet before you agree a salary, not after.
Finally, set the right category letter for under-21s, young apprentices and veterans, and claim the allowance each tax year. Small payroll mistakes here can cost you thousands. If you want to see how a role compares abroad, our guide to what UK startups spend on a first remote hire follows the costs from setup to month 12.
Frequently asked questions
How much is employer National Insurance per employee in 2026 to 2027?
For most employees, it is 15% of yearly pay above £5,000. On a £30,000 salary that is £3,750 a year, and on £50,000 it is £6,750. The Employment Allowance can reduce the total for your whole payroll by up to £10,500.
Does the Employment Allowance apply to each employee?
No. It is one allowance per employer each tax year, up to £10,500 in total. If you are part of a group of connected companies, only one company in the group can claim it.
Can I claim the Employment Allowance as a one-person limited company?
Usually not. You cannot claim if your company has one director and that director is the only employee liable for employer NI. Once you employ someone else, you may be able to claim, so check with your accountant.
Is the minimum employer pension 3% of the full salary?
Not in most schemes. In most automatic enrolment schemes, the 3% is worked out on earnings between £6,240 and £50,270 a year. Your scheme may use the full salary or a higher rate, so check its rules.
Do I pay employer NI on an apprentice?
For an apprentice under 25 on letter H, you usually pay 0% on pay up to £50,270 a year. You pay 15% only on pay above that. Check the apprentice meets the rules and that payroll uses the right letter.
Ready to put real numbers on a role? Compare the cost of your next hire with Flink's savings calculator.
Correct at the time of writing (October 2026). Rates and rules change, so check the linked source.
Sources
- Rates and thresholds for employers 2026 to 2027, HM Revenue and Customs on GOV.UK, (accessed 24 October 2026)
- Workplace pensions: what employers must do, GOV.UK, (accessed 24 October 2026)
- Workplace pensions: what you, your employer and the government pay, GOV.UK, (accessed 24 October 2026)
- Claim Employment Allowance, GOV.UK, (accessed 24 October 2026)
- Claim Employment Allowance: eligibility, GOV.UK, (accessed 24 October 2026)
- Claim Employment Allowance: how to claim, GOV.UK, (accessed 24 October 2026)
- Claim Employment Allowance: when to claim, GOV.UK, (accessed 24 October 2026)
- Flink savings calculator, Flink Remotely, (accessed 24 October 2026)
- How to Reduce Recruitment Costs Without Reducing the Quality of Hires, Flink Remotely, (accessed 24 October 2026)
- The Real Cost of Hiring a Software Engineer in the UK in 2026, Flink Remotely, (accessed 24 October 2026)
See what your next hire would cost. Flink helps UK businesses hire skilled remote employees in South Africa, with recruitment, contracts and payroll handled for you.
Or book a call and we will talk it through.