Employers · National Insurance
Employer NI explained: what it costs to employ someone in 2026/27
Employer's National Insurance at 15% explained with real numbers. See the true cost of employing someone at £20k, £30k, and £40k salaries — plus pensions, apprenticeship levy, and hidden costs.
Hiring someone in the UK costs more than their salary. Employer's National Insurance is the biggest surprise for first-time employers. Here's exactly what it costs in 2026/27.
The current rate
Employer's Class 1 NI is 15% on everything above £5,000 per year (Secondary Threshold, from April 2026). There's no upper cap — you pay 15% on the entire salary above £5,000, however high.
What it costs to employ someone
| Gross salary | Employer NI (15%) | Employer Pension (3%) | Total cost to business |
|---|---|---|---|
| £20,000 | £2,250 | £600 | £22,850 |
| £30,000 | £3,750 | £900 | £34,650 |
| £40,000 | £5,250 | £1,200 | £46,450 |
| £60,000 | £8,250 | £1,800 | £70,050 |
That's before you factor in equipment, software, workspace, and the manager time to onboard.
The Employment Allowance
Small employers can claim up to £10,500 back per year against their Employer NI bill. Restrictions:
- You must have paid less than £100k in Employer NI in the previous tax year.
- You need at least one employee (or director) earning above the Secondary Threshold.
- Sole directors of a limited company can't claim it (single-director companies excluded).
Other hidden costs
- Apprenticeship Levy — 0.5% of your total wage bill if it exceeds £3m/year.
- Statutory Sick Pay — £116.75/week (2026/27) after 4 days off sick.
- Employer's Liability Insurance — legally required, £150–£500/year for a small team.
- Payroll software or bureau — £5–£30/month typical.
Clok Team tracks hours and holiday accrual so your payroll bureau has clean, approved data every pay run — no reconciliation, no over-payment.
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