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Employer NI calculator and total employment cost
UK tax year 2026/27 · 6 April 2026 to 5 April 2027 · Sources checked 31 October 2026 · By NI Pension Check
Budget for one employee’s salary, employer National Insurance and employer pension. Add your own overheads and one-off setup costs. This is an annual planning estimate for standard employer NI, not payroll software.
Short answer
For an illustrative £30,000 annual salary, standard employer NI is £3,750. A 3% employer pension on qualifying earnings adds £712.80. That makes £34,462.80 a year before Employment Allowance, overheads and setup costs.
Looking to fill your own NI record? Use the State Pension gap calculator. Employer NI is separate from voluntary Class 2/3 contributions and does not calculate a worker’s pension entitlement.
Calculation method
- Standard annualised employer NI = 15% × max(0, annual cash pay − £5,000).
- Qualifying-earnings pension base = max(0, min(cash pay, £50,270) − £6,240). Multiply by your employer rate. Alternatively select the full-pay basis specified by your scheme.
- Deduct only the eligible, unused allowance you allocate, limited to the estimated employer NI. Salary and pension are not reduced by this allowance.
- Add salary, employer NI after allocation, employer pension and your recurring overheads. Add setup costs once for the first-year total.
Each annual component rounds to pennies before totals are added. This is an annualised comparison, not a reconstruction of weekly or monthly payroll. Payroll thresholds and rounding can produce different results. Record the inputs and source date when comparing candidates or budgets.
Worked examples
| Item | £30,000 salary | £100,000 salary |
|---|---|---|
| Employer NI before allowance | £3,750.00 | £14,250.00 |
| 3% qualifying-earnings pension | £712.80 | £1,320.90 |
| Total before allowance | £34,462.80 | £115,570.90 |
If an eligible employer allocates £2,000 of genuinely unused allowance to the £30,000 example, estimated net employer NI is £1,750 and recurring cost is £32,462.80. That does not create a fresh £2,000 allowance for every hire. With no allowance, £1,200 annual overheads and £800 setup costs, the same example costs £35,662.80 recurring and £36,462.80 in the first year.
What the model leaves out
We do not calculate employee take-home pay, special NI categories, salary sacrifice, benefits-in-kind/Class 1A, Apprenticeship Levy, statutory-pay recoveries, irregular pay or termination liabilities. The model is not suitable for determining the exact NI liability of directors or employees with reliefs. A payroll professional should confirm those cases.
Pension selection is an assumption, not an eligibility assessment. Age, pay and scheme rules affect duties. Selecting “exclude pension” or a lower rate does not remove a legal obligation. Do not add paid holiday as another percentage of salary automatically: ordinary paid leave is normally already within annual salary. Temporary cover and productive-hour costing are different budgeting questions.
Employment Allowance has eligibility restrictions, including some single-director businesses, public-sector work and connected employers. Check your employer-wide position before allocating it.
Official sources and review date
- HMRC: employer rates and thresholds 2026/27 — standard NI rate, secondary threshold and allowance maximum.
- GOV.UK: workplace pension contributions — minimum employer contribution and earnings basis.
- HMRC: Employment Allowance eligibility — employer-wide eligibility checks.
Reviewed 31 October 2026. Rate changes require a new source check and regression checks; the page does not automatically fetch or certify tax rules. Report a calculation or source issue.
Frequently asked questions
Is employer NI the same as voluntary Class 3?
No. This calculator estimates the employer side of Class 1 employment costs. Voluntary Class 3 payments concern an individual’s National Insurance record and use the separate State Pension gap calculator.
Is the monthly figure a payroll calculation?
No. It is the annual planning estimate divided by 12. Actual payroll uses pay-period thresholds, rounding and the applicable NI category.
Can I deduct Employment Allowance for every employee?
No. It is employer-wide. Enter only an eligible, unused amount deliberately allocated to this scenario; do not reuse the same allocation across hires.
Does paid holiday need adding on top of salary?
Not automatically. Paid leave is normally already within an annual salary. Cover costs or cost per productive hour are separate planning questions.
Does this calculate employee take-home pay?
No. Employee Income Tax, employee NI and personal State Pension entitlement are outside this model.