Employer National Insurance Cost Per UK Employee in 2026/27

The direct answer: 15% above £5,000 for 2026/27

The employer rate of National Insurance is 15% for the 2026/27 tax year. The rate went up from 13.8% in April 2025, and the point where employer National Insurance starts fell at the same time, from £9,100 to £5,000 a year. GOV.UK publishes the employer rates by pay period for 6 April 2026 to 5 April 2027, and the lowest band runs up to £96 a week, or £417 a month, at 0%. Anything above that is charged at 15%.

The charge is set under the Social Security Contributions and Benefits Act 1992, the law that sets out National Insurance contributions in Great Britain. The annual rates and thresholds are then published by HM Revenue and Customs (HMRC) for each tax year. For 2026/27, HMRC's published rates confirm the 15% rate and the £5,000 threshold. If you are reading this after the tax year has changed, check the GOV.UK rates page for the new year before you use these numbers.

The charge is a cost to you, the employer. It is not taken from the employee's wages. The employee pays their own National Insurance separately, at 8% on earnings between £12,570 and £50,270 a year and 2% above that. Your payroll system takes that from the employee's pay. Your bill is the 15% on top of the gross salary.

How the figure is worked out, step by step

The calculation is simple, but payroll software does it once for every pay period, not once for the whole year. That matters for the threshold, because the £5,000 figure is applied as £96 a week or £417 a month, depending on how often you pay.

1. Take the employee's gross pay for the pay period. This includes salary, overtime, bonuses and any other taxable pay, not just the basic salary in the contract.
2. Subtract the secondary threshold for that period. For a year it is £5,000, for a month it is £417, and for a week it is £96.
3. If the result is above zero, multiply it by 15%. This is the employer National Insurance for that period.
4. Repeat for each pay period and add the results together. This gives the annual employer National Insurance for that person.
5. If the employee falls into a special category, use the category rate instead of 15% on every band. Some categories are covered later in this guide.

A quick check is to multiply the annual salary by 15% and then subtract £750. That gives the same result as subtracting £5,000 first, because £5,000 times 15% is £750. This shortcut works only for employees in the standard category, which covers most staff aged 21 and over.

A worked example with real numbers

Take an employee aged 30 who is paid £35,000 a year and is not a company director. The employer's bill for this person has three parts: the salary, the employer National Insurance, and the employer pension minimum.

The employer National Insurance is £35,000 minus £5,000, which leaves £30,000. At 15%, that is £4,500 a year. This is a cost you pay on top of the salary, and it does not appear as a deduction from the employee's payslip.

The pension minimum is a separate cost. Under automatic enrolment, the employer must pay at least 3% of qualifying earnings. Qualifying earnings are the part of pay between the lower earnings limit of £6,240 and the upper limit of £50,270. For this employee, that is £35,000 minus £6,240, which equals £28,760. At 3%, the employer pays £862.80 a year.

Adding the three parts together gives a total cost of about £40,363 before any other overheads. That is £35,000 in salary, £4,500 in employer National Insurance and £862.80 in pension, which together come to £40,362.80. The extra £5,362.80 is the on-cost, or about 15.3% above salary. The percentage depends on the salary, so it will be different for each person on your payroll.

Now scale this to a small team. Suppose you employ four people on £35,000 each and you are eligible for the Employment Allowance. Your employer National Insurance is four times £4,500, which is £18,000. The Employment Allowance can take up to £10,500 off that bill, which leaves £7,500 to pay. The allowance is a reduction in what you owe, not a cash payment to you. If your bill was lower than £10,500, the allowance would only cover the amount you actually owe.

The cases that change the answer

The 15% rate and the £5,000 threshold apply to most employees, but not all of them. GOV.UK uses category letters to show which band applies to each employee. The table below summarises the main categories from the 2026/27 table on GOV.UK.

Some publishers summarise category C as 15% only above £5,000. The GOV.UK table shows 15% in the lowest band for that category, so check the current table before you set up payroll for anyone over State Pension age. The table also covers freeport and investment zone categories, which have their own bands. If you employ people in those categories, check the category letter on the official table.

The Employment Allowance has its own tests. It is worth up to £10,500 a year for 2026/27, but it is not automatic. The employer must claim it, usually through payroll software, and the allowance is used up against each payroll run until the full £10,500 is used or the tax year ends. There are four cases that matter most for many employers:

• A limited company whose only employee paid above the secondary threshold is a director cannot claim it. The company needs at least one other employee, or another director, paid above the threshold.
• Businesses where more than half of the work is in the public sector cannot claim it.
• Connected companies and charities that are linked to each other share one £10,500 allowance between them, and only one of them can claim it.
• The allowance cannot be used against the employee's own National Insurance, against income tax deducted from pay, or against Class 1A charges on benefits in kind.

The rate also has no cap for the employer. The 15% applies to every pound above the threshold, with no upper limit. This is different from the employee's rate, which drops from 8% to 2% above £50,270. A higher earner therefore carries a larger employer National Insurance cost in pounds, not a smaller one.

Employees who receive benefits in kind, such as a company car or private medical cover, create a separate employer charge. Class 1A National Insurance is charged at 15% for 2026/27 on most of those benefits. It is paid once a year, after the end of the tax year, and it is not part of the salary calculation above.

Common mistakes

Most errors in this calculation come from a few habits. The first is charging 15% on the full salary. This overstates the cost by £750 a year for each standard employee, and it is a common error in quick budgets. The second is treating the Employment Allowance as cash. It reduces what you owe to HMRC, and it can only reduce it by up to what you actually owe.

The third mistake is leaving out the pension. The employer minimum of 3% applies to most staff who are eligible for automatic enrolment, and the duty comes from the Pensions Act 2008. Many budgets include the salary and National Insurance but forget that the pension is a separate cost. The fourth is forgetting that the Employment Allowance is not applied automatically. If it is not claimed through payroll, the money is not reduced.

The fifth mistake is applying the adult rate to people in the special categories. A group of under 21s or apprentices may cost less in employer National Insurance than the figure you would get from the standard formula. Using the wrong category letter means you either overpay or underpay HMRC.

What to check with HR, payroll or a lawyer

Start with your payroll software or your payroll provider. Ask whether the category letters are set correctly for every employee, and whether the Employment Allowance is claimed and shown on your Employer Payment Summary. Check the rates for 2026/27 on the GOV.UK rates page, because thresholds can change from one tax year to the next.

Confirm the pension figures with your pension provider. Ask which earnings basis the scheme uses, and whether the employer contribution is calculated on qualifying earnings or on total pay. Ask also whether any employees are opted in or opted out, because the calculation changes for them.

Look at costs that this formula does not include. Equipment, software licences, training, recruitment, holiday pay and any apprenticeship levy are real costs for an employer. They are not covered by this calculator, because the rules and amounts depend on your business and on the employee's contract. Check these with your accountant or HR adviser before you set a budget.

If you are planning any change to hours, pay or roles, the employer's notice, consultation and severance rules apply. Those changes should be agreed with the employee or checked with a lawyer before you act.

This explains the rule in general terms; it is not legal or tax advice for your case.

How routine HR and payroll work can run with AI workers

Much of this calculation is repeated work. Each pay run needs the same thresholds, the same category letters, the same pension basis and a check on the Employment Allowance. AI workers can collect the payroll figures, apply the rules you set, flag any employee whose category or pension basis looks wrong, and prepare the monthly totals for a person to review. The payroll owner still approves the figures, decides any exceptions and submits the returns. The result depends on how clean your payroll data is, and the free audit measures that for your business.