Employer NI Calculator 2026/27

How Employer NI Works in 2026/27

Employer National Insurance is a tax paid by employers on top of an employee's wages — separate from the employee's own NI deductions. You pay it directly to HMRC via payroll. It does not come out of the employee's salary.

The formula is straightforward:

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

So for an employee on £30,000: (£30,000 − £5,000) × 15% = £3,750 per year, or £312.50 per month. That's on top of the £30,000 salary — it comes entirely from the employer.

How Employer NI Has Changed: 2022 to 2026

The rate and threshold have shifted significantly over the past four years. This table is useful if you're comparing costs year-on-year or explaining the increase to a board or finance team:

The April 2025 changes added £867 to the annual NI cost of a £30,000 employee. On a team of 10, that's £8,670 more per year.

Employer NI at Common Salary Levels

How much extra does the April 2025 rate change cost compared to before? Here's the full breakdown including the cost increase:

2024/25 figures calculated at 13.8% above the old £9,100 threshold. Employment Allowance not applied.

Reduced NI for Young Workers and Apprentices

Hiring workers under 21, or apprentices under 25, significantly reduces employer NI. For these employees the Upper Secondary Threshold applies — currently £50,270 — meaning you pay zero employer NI on their earnings up to that level.

In practice: a 20-year-old earning £25,000 costs you £0 in employer NI. The same salary for someone aged 21+ costs £3,000. That's a meaningful difference for businesses that can hire apprentices or younger workers.

Director NI: How It Works Differently

Company directors are calculated differently from regular employees. Directors are classed as “office holders” and their NI is calculated on an annual earnings basis rather than per pay period. This means:

• The full annual Secondary Threshold (£5,000) is applied once across the year, not per pay run
• If a director takes a low salary early in the year and a dividend later, NI is recalculated across the full year at year end
• Many directors take a salary just above the Secondary Threshold to preserve NI credits while minimising the NI bill

The most tax-efficient director salary for 2026/27 is typically set just above £5,000 to avoid employer NI entirely while still qualifying for the state pension year. Speak to your accountant about the right level for your situation.

Employment Allowance: Who Can Claim and Who Cannot

The Employment Allowance reduces your employer NI bill by up to £10,500 per tax year. You claim it through your payroll software at the start of each tax year.

You can claim if you are:

• A business or charity paying employer Class 1 NI
• A community amateur sports club (CASC)
• An employer whose total NI bill was under £100,000 in the previous tax year — note: from 2026/27, this cap has been removed and all eligible employers can now claim regardless of their NI bill

You cannot claim if you are:

• A company where the sole employee is also a director (single-director companies with no other employees)
• A public authority or body (local councils, NHS trusts, etc.)
• An employer whose work is more than 50% in the public sector (e.g. a cleaning contractor where most work is for public bodies)
• A service company using IR35 off-payroll rules

The allowance is applied against your employer NI bill until it is used up or the tax year ends. It is not refunded in cash — it only offsets NI you owe.

Reducing Your Employer NI Bill: 5 Practical Steps

1. Claim Employment Allowance — if eligible, this saves up to £10,500 immediately. Many small employers forget to claim at the start of the tax year.
2. Use salary sacrifice for pensions — when employees exchange salary for employer pension contributions, the NI-able pay falls. Both employer and employee save NI. On a £30,000 salary with 5% salary sacrifice, the employer saves around £225/year per employee. See our workplace pension calculator to model this.
3. Hire under-21s or apprentices under 25 — zero employer NI up to £50,270. For roles suited to apprentices, the NI saving alone can offset a significant portion of training costs.
4. Consider Freeport or Investment Zone locations — employers in designated Freeport tax sites and Investment Zones can pay zero employer NI on new employees earning up to £25,000. Check HMRC guidance to see if your business location qualifies.
5. Review benefits in kind — some benefits (e.g. electric vehicles via salary sacrifice, cycle to work, childcare vouchers) are exempt from employer NI. Structuring benefits correctly can reduce your Class 1A NI liability on P11D items.

Employee NI vs Employer NI: What's the Difference?

This is one of the most searched questions around NI — and one of the most confused. They are completely separate charges:

On a £30,000 salary, the combined NI paid to HMRC is £5,144/year — £1,394 from the employee's pay and £3,750 paid separately by the employer on top. The employee never sees the employer NI; it is invisible to them on their payslip.

Employer NI on Bonuses, Overtime and Commission

Employer NI applies to all earnings above the Secondary Threshold — not just base salary. This includes:

• Bonuses: a £5,000 bonus triggers £750 in employer NI (£5,000 × 15%)
• Overtime pay: any overtime earnings above the threshold attract 15% employer NI
• Commission: same — all commission above the threshold is NI-able
• Tips via PAYE: tips paid through payroll are subject to employer NI

What is excluded: employer pension contributions (if structured correctly), benefits in kind reported via P11D (these attract Class 1A NI instead, due annually), and statutory payments like SSP and SMP.

Planning point: if you pay a large annual bonus, consider whether it can be structured as a salary sacrifice pension contribution instead — the employee still receives value, but both parties save NI.

Class 1A and Class 1B: NI on Benefits

Employer NI doesn't only apply to wages. Two other classes can affect your bill:

• Class 1A NI — paid by employers on benefits in kind (company cars, private medical insurance, etc.) reported on P11D forms. The rate is 15% for 2026/27. Due by 19 July (or 22 July if paying electronically) each year.
• Class 1B NI — paid as part of a PAYE Settlement Agreement (PSA), which allows you to pay tax and NI on minor or irregular benefits on behalf of employees in a single annual payment. Useful for things like staff parties or small gifts that exceed the trivial benefits exemption.

Employer NI and Total Employment Cost

Employer NI is one component of the total cost of employing someone. Use our employee cost calculator to see the full picture including pension, and our workplace pension calculator to model salary sacrifice savings.

Further Reading

• Employer Payroll Costs 2026/27 — The Complete Guide — every employment cost in one place: NI, pension, SSP, SMP, holiday and NMW
• UK Employer NI Rates 2026/27: 15% Rate & £5,000 Threshold Explained — full rate tables, age-group thresholds and worked examples
• Employment Allowance 2026/27: £10,500, Eligibility & How to Claim — check if you qualify and how to claim through payroll
• Salary Sacrifice Pension Calculator — how much employer NI you save by routing pension contributions via salary sacrifice
• UK National Insurance Rates 2026/27: Employee & Employer Tables — complete Class 1 rate and threshold reference for both sides of NI