How much does it really cost to take on an employee? Use our calculator to work out the total cost to your business in 2026/27, including salary, employer National Insurance and pension contributions. You can also see how Employment Allowance could reduce your costs.
Employee Cost Calculator
Work out the annual and monthly cost of employing someone.
2026/27
Your estimated employment costs
How much does it cost to employ someone?
The salary you agree with an employee isn’t necessarily what they’ll cost your business. There may also be employer National Insurance, workplace pension contributions and expenses such as equipment, training and insurance.
Our calculator starts with the employee’s annual salary and any bonus, then adds employer NI and pension costs. You can include other expenses and see how much Employment Allowance could save you.
If you’re taking on staff for the first time, our first employee checklist covers the main steps, including registering as an employer. We also have a guide to setting up and running payroll.
Employer National Insurance in 2026/27
For most employees, the employer NI rate is 15% on annual earnings above £5,000. An employee earning £30,000 therefore generates £3,750 in employer NI before any allowance or relief.
Different thresholds apply to some employees. Employers can pay 0% on earnings up to £50,270 for qualifying workers under 21, apprentices under 25 and eligible veterans. The veteran relief only covers the first 12 months of civilian employment. Choose the appropriate category in the calculator if the employee qualifies.
Does Employment Allowance reduce the cost?
It can make a sizeable difference. For 2026/27, eligible employers can claim up to £10,500 off their employer Class 1 NI bill. But that’s an allowance for the business, not £10,500 for each employee.
If you’ve already used some of it against other staff, enter that amount in the calculator. And don’t assume your business qualifies: for example, a company with only one director who is also its sole employee liable for secondary Class 1 NI will generally be excluded.
Our guide to the £10,500 Employment Allowance explains the rules in more detail. You can also check HMRC’s eligibility guidance.
What about workplace pensions?
Employers normally have to enrol eligible staff into a workplace pension and contribute towards it. The usual statutory minimum employer contribution is 3% of qualifying earnings, rather than 3% of the whole salary. For 2026/27, the qualifying earnings band runs from £6,240 to £50,270.
The automatic enrolment earnings trigger is £10,000 a year, but age and pay-period rules also apply. Some employees below that figure can opt in and qualify for employer contributions. If your pension scheme uses full pay rather than qualifying earnings, select that option instead.
See our guide to pension auto-enrolment for small businesses or The Pensions Regulator’s earnings thresholds.
Example: an employee on £30,000 a year
Say you’re paying someone a salary of £30,000, with no bonus or additional employment costs. Using the standard employer NI rate and minimum pension contributions on qualifying earnings, the annual figures are:
- Salary: £30,000
- Employer National Insurance: £3,750
- Employer pension contribution: £712.80
- Total before Employment Allowance: £34,462.80
If your business qualifies for Employment Allowance and has at least £3,750 left to use, the estimated cost falls to £30,712.80.
This is an annual estimate, not a payroll calculation. Actual NI and pension deductions can vary by pay period. The calculator doesn’t include the Apprenticeship Levy, salary sacrifice arrangements or every employer NI relief. You may also need employers’ liability insurance.