UK Employer Cost Calculator 2026/27
Estimate salary, employer National Insurance, workplace pension, benefits and overhead.
What this calculator explains
The cost of employing someone exceeds salary because the employer may pay Class 1 National Insurance, workplace pension contributions, benefits, insurance, paid leave and operating overhead. The calculator separates statutory items from optional or company-specific assumptions.
Employment Allowance is applied to the employer’s remaining eligible Class 1 National Insurance liability, not independently to every employee scenario. This prevents the same annual allowance from being counted more than once.
How the estimate is calculated
- Add salary, bonus and commission to calculate cash compensation.
- Calculate employer National Insurance by pay period using the selected category and 2026/27 thresholds.
- Calculate the employer pension contribution on the selected qualifying-earnings or contractual basis.
- Apply only the entered remaining Employment Allowance where the employer is eligible.
- Add benefits, insurance, recruiting, equipment and overhead.
- Report recurring annual cost, first-year cost and cost per paid or productive hour.
Formula
Total employer cost = cash compensation + employer National Insurance + employer pension + benefits + insurance + recruiting, equipment and overhead
Worked example
For a £50,000 salary, a simplified standard employer National Insurance estimate at 15% above a £5,000 Secondary Threshold is £6,750. A 3% employer pension on qualifying earnings from £6,240 to £50,000 is £1,312.80. Adding £2,000 of benefits produces an illustrative recurring cost of £60,062.80 before any eligible Employment Allowance or other overhead.
Current rules and configuration notes
- The standard employer National Insurance rate for 2026/27 is 15% above the applicable Secondary Threshold, subject to employee-category rules and reliefs.
- The annual Employment Allowance is £10,500 where the employer is eligible; the calculator asks for the amount remaining instead of applying it repeatedly to every employee.
- Workplace pension, benefits, insurance and internal overhead remain separate configurable costs.
Update requirement: Review employer NI thresholds/rates, Employment Allowance and pension qualifying-earnings thresholds each tax year.
Included in the estimate
- Salary, bonus and commission
- Employer National Insurance
- Workplace pension contribution
- Benefits and insurance
- Remaining Employment Allowance scenario
- First-year and recurring cost views
Not included or not guaranteed
- Payroll submission or pension assessment
- Every NI category and relief unless supported
- Statutory leave reimbursement or apprenticeship funding
- Employment-law compliance
- Productivity and revenue generated
Frequently asked questions
How much does an employee cost above salary?
There is no fixed markup. Employer NI, pension, benefits and overhead vary by pay, employee category and company policy.
What is the employer NI rate for 2026/27?
The standard rate is 15% above the applicable Secondary Threshold, subject to category-specific thresholds and reliefs.
How should Employment Allowance be used?
Enter only the remaining amount available to the employer and apply it across the wider payroll model, not as a fresh allowance for every employee.
Is the minimum pension always 3% of salary?
Auto-enrolment minimum employer contributions are commonly calculated on qualifying earnings, but a scheme can use a different certified basis or more generous terms.
Do paid holidays add a separate salary cost?
Salary normally continues during paid annual leave. Their effect appears when cost is divided by productive hours or when cover and overtime are modeled.
Can I compare contractor and employee cost?
Yes, for transparent budgeting assumptions. The tool does not decide employment status or IR35.
Official sources
- GOV.UK — National Insurance rates and allowances
- GOV.UK — Employment Allowance
- GOV.UK — Workplace pension contributions
Applicable period: 2026-04-06/2027-04-05 · Last reviewed: September 3, 2026
Recommended internal links
Create a hiring-cost scenario for finance
Export salary, statutory employment costs, benefits and first-year costs as separate lines.
CTA destination: /uk/business/employer-cost-calculator/