Employer National Insurance is a significant hidden cost of employment. Here’s how it works in 2026/27 and what it means for both employers and employees.
For the wider cluster covering NI rates, credits and records, use the main National Insurance hub.
Employer NI Rates 2026/27
| Element | 2026/27 |
|---|---|
| Rate | 15% |
| Secondary Threshold | £5,000/year |
| Employment Allowance | £10,500 |
| Applies to | All earnings above £5,000 |
Employer NI at 15% applies to all employee earnings above the £5,000 Secondary Threshold. There is no upper limit — unlike employee NI which drops to 2% above £50,270.
Employer NI by Salary Level
| Employee salary | Employer NI (15%) | Total employment cost | NI as % of salary |
|---|---|---|---|
| £12,570 | £1,136 | £13,706 | 9.0% |
| £20,000 | £2,250 | £22,250 | 11.3% |
| £25,000 | £3,000 | £28,000 | 12.0% |
| £30,000 | £3,750 | £33,750 | 12.5% |
| £35,000 | £4,500 | £39,500 | 12.9% |
| £40,000 | £5,250 | £45,250 | 13.1% |
| £50,000 | £6,750 | £56,750 | 13.5% |
| £60,000 | £8,250 | £68,250 | 13.8% |
| £70,000 | £9,750 | £79,750 | 13.9% |
| £80,000 | £11,250 | £91,250 | 14.1% |
| £100,000 | £14,250 | £114,250 | 14.3% |
True Cost of an Employee
Employer NI is just one component. The full cost of employing someone includes:
| Cost element | On £40,000 salary | On £60,000 salary |
|---|---|---|
| Gross salary | £40,000 | £60,000 |
| Employer NI (15%) | £5,250 | £8,250 |
| Pension (3% minimum) | £1,200 | £1,800 |
| Apprenticeship Levy (if applicable) | £200 | £300 |
| Total minimum cost | £46,650 | £70,350 |
Additional Employment Costs
Many employers also face:
- Holiday pay (28 days statutory = ~10.8% of salary)
- Sick pay (SSP or enhanced)
- Training and development
- Equipment, office space, software
- HR, payroll, and admin costs
- Benefits (health insurance, life cover, etc.)
A common rule of thumb is that the true cost of an employee is 1.3–1.5 times their salary.
The 2025 Employer NI Increase — Impact
From April 2025, employer NI changed significantly:
| Element | Before April 2025 | From April 2025 |
|---|---|---|
| Rate | 13.8% | 15% |
| Secondary Threshold | £9,100 | £5,000 |
| Employment Allowance | £5,000 | £10,500 |
Cost Impact by Salary
| Salary | Old employer NI | New employer NI | Annual increase |
|---|---|---|---|
| £20,000 | £1,504 | £2,250 | +£746 |
| £30,000 | £2,884 | £3,750 | +£866 |
| £40,000 | £4,264 | £5,250 | +£986 |
| £50,000 | £5,644 | £6,750 | +£1,106 |
| £70,000 | £8,404 | £9,750 | +£1,346 |
The increase hits lower-paid workers hardest proportionally, as the lower Secondary Threshold means NI starts £4,100 earlier.
Employment Allowance
The Employment Allowance allows eligible employers to reduce their NI bill by up to £10,500 per year:
| Eligibility | Details |
|---|---|
| Available to | Employers with NI bill under £100,000 in previous year |
| Not available to | Single-director companies with no other employees |
| Amount | Up to £10,500 off annual employer NI |
| Applied | Automatically through payroll software |
For a small business with 3 employees on £30,000 each:
- Total employer NI: 3 × £3,750 = £11,250
- Employment Allowance: -£10,500
- NI actually paid: £750
How Salary Sacrifice Saves Employer NI
When an employee agrees to salary sacrifice (e.g., for pension, EV, or cycle to work), their contractual salary reduces. This saves employer NI on the sacrificed amount:
| Example: £40,000 salary, £4,000 pension sacrifice | Without sacrifice | With sacrifice |
|---|---|---|
| Gross salary | £40,000 | £36,000 |
| Employer NI | £5,250 | £4,650 |
| Employer NI saving | — | £600 |
Many employers pass some or all of this saving back to employees as additional pension contributions, making salary sacrifice beneficial for both parties.
Employer NI on Different Payment Types
| Payment type | Employer NI due? |
|---|---|
| Basic salary | Yes |
| Overtime | Yes |
| Bonuses | Yes |
| Commission | Yes |
| Holiday pay | Yes |
| Statutory sick pay | Yes |
| Pension contributions (employer) | No |
| Salary sacrifice amounts | No (on the sacrificed portion) |
| Benefits in kind | Some (Class 1A NI at 15%) |
| Mileage within HMRC rates | No |
| Genuine expenses/reimbursements | No |
Employer NI for Self-Employed
Self-employed individuals don’t pay employer NI if they work alone. However, if they employ staff, they pay exactly the same employer NI rates as any other business.
For contractors working through a limited company (IR35):
- Outside IR35: The company pays employer NI on the director’s salary
- Inside IR35: The end client or agency pays employer NI on the deemed employment payment