UK Employer Cost Calculator
Enter an annual or monthly gross salary to estimate employer National Insurance and an optional workplace pension on top. Apply Employment Allowance only if the employer is eligible and still has allowance available.
LedgerKit provides estimates based on the information entered and the configured rates. Results do not constitute accounting, tax or legal advice. Check the latest official guidance or consult a qualified professional before acting on a calculation.
How this calculator works
Choose a tax year and enter one employee’s regular gross salary before employee deductions. A monthly salary is multiplied by 12. The result is an employer-side planning estimate, not a payslip or take-home calculation.
For 2026/27 and 2025/26, standard employer Class 1 National Insurance is estimated at 15% of annual salary above the £5,000 Secondary Threshold. Payroll normally calculates National Insurance for each pay period, so its result can differ slightly from this annual estimate.
Employment Allowance can reduce eligible employer National Insurance by up to £10,500 across the whole payroll. Enter only the amount expected to remain after other employees’ liabilities. The calculator does not decide whether the employer can claim it.
For the usual qualifying-earnings pension basis, the selected employer rate is applied to annual earnings between £6,240 and £50,270. You can instead apply a rate to the full salary or exclude the pension. The pension scheme’s own rules decide the correct basis and rate.
The estimate is for one employee using standard Category A employer National Insurance. It excludes employee Income Tax and National Insurance, benefits, Class 1A National Insurance, salary sacrifice, Apprenticeship Levy, statutory payments and non-payroll hiring costs.
Worked example
For 2026/27, a £30,000 annual salary with no Employment Allowance gives estimated employer National Insurance of £3,750. At 3% of qualifying earnings, £23,760 is pensionable and the employer pension is £712.80. The estimated annual employer cost is £34,462.80, or an average of £2,871.90 a month.
Frequently asked questions
Is employer National Insurance deducted from salary?
No. Employer National Insurance is normally an extra cost paid by the employer. Employee National Insurance and Income Tax are separate deductions from gross pay and are not calculated here.
Can I claim Employment Allowance?
Eligible employers can reduce employer Class 1 National Insurance by up to £10,500 across their payroll. Important exclusions apply. In particular, a company cannot claim where its sole director is the only employee liable for employer National Insurance. Check HMRC’s eligibility guidance before entering an amount.
What are qualifying earnings for the pension estimate?
For 2026/27 and 2025/26, the annual qualifying-earnings band is £6,240 to £50,270. The calculator applies the chosen rate only to earnings within that band. Pension schemes can use a different certified basis, such as full salary or basic pay.
Why might payroll show a different employer NI figure?
Ordinary employee National Insurance is normally worked out and rounded for each pay period. This calculator uses a clear annual estimate, so pennies can differ. Starters, leavers, directors and special NI categories can produce larger differences.
Does every employee need a 3% employer pension?
No. Automatic-enrolment duties depend on age, earnings, worker status and whether someone opts in or out. Three per cent is the usual minimum employer rate for a qualifying-earnings scheme, but another basis or a higher rate may apply.
Does this show every cost of hiring someone?
No. Add recruitment, equipment, training, insurance, benefits, leave cover and other overheads separately. Bonuses and overtime are included only if you build them into the salary entered.