Employer Cost Calculator

See the true cost of a hire in 2025/26 — gross salary plus employer National Insurance (15%) and minimum auto-enrolment pension contributions.

The Role

Most single-director companies with no other employees cannot claim the Employment Allowance.

Your results appear here

Enter your details, then press Calculate True Cost to see the full breakdown.

Complete guide

The true cost of an employee (2025/26)

A salary is only part of what an employee costs you. On top of gross pay, an employer pays National Insurance, a minimum workplace pension, and often benefits and overheads. Budgeting on salary alone routinely understates the real cost by 15–20%.

Employer NI

Secondary Class 1 National Insurance — 15%

From 6 April 2025 employer (secondary) National Insurance is charged at 15% on earnings above the secondary threshold of £5,000 a year. That threshold dropped sharply from £9,100, and the rate rose from 13.8%, so employing staff costs noticeably more in 2025/26 than before.

Employer NI = (Salary − £5,000) × 15%
Pensions

Auto-enrolment workplace pension

You must automatically enrol eligible staff into a workplace pension and contribute at least 3% of their qualifying earnings. Qualifying earnings for 2025/26 are the slice of pay between £6,240 and £50,270. Total minimum contributions are 8% (3% employer + 5% employee).

Relief

The Employment Allowance

Eligible employers can claim the Employment Allowance, which reduces their annual employer NI bill by up to £10,500 in 2025/26. However, a limited company whose only employee is also a director generally cannot claim it — a common trap for one-person companies.

Worked example

Hiring on £35,000

Take an employee on £35,000 with the minimum 3% pension and no Employment Allowance:

  • Employer NI: (£35,000 − £5,000) × 15% = £4,500.
  • Qualifying earnings: £35,000 − £6,240 = £28,760.
  • Employer pension: £28,760 × 3% = £862.80.
  • True cost: £35,000 + £4,500 + £863 = £40,363 — about 15.3% on top of salary.
Don't forget

The costs this calculator excludes

Beyond pay, NI and pension, budget for: recruitment fees, equipment and software, training, holiday and sick cover, Class 1A NI on taxable benefits, employer's liability insurance, and office space. A useful rule of thumb is that the fully-loaded cost of an employee is 20–30% above their gross salary.

Benefits attract their own NI

Taxable benefits like a company car or private medical cover trigger Class 1A employer NI at 15% on the benefit value — an extra cost on top of the figures above.
Avoid these

Common employer cost mistakes

  • Budgeting on salary alone. Employer NI and pension add roughly 15% before you count any benefits or overheads.
  • Assuming you can claim Employment Allowance. Single-director companies with no other staff usually cannot claim the £10,500 allowance.
  • Ignoring the £5,000 secondary threshold change. The threshold fell to £5,000 and the rate rose to 15% in April 2025, raising costs versus prior years.
  • Forgetting Class 1A on benefits. Company cars and medical cover add 15% employer NI on the benefit value each year.
FAQ

Frequently asked questions

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