Employer Cost FAQs
How much does an employee really cost?
Salary + employer NI at 15% above £5,000 + minimum 3% pension + (for big employers) 0.5% Apprenticeship Levy. A £35,000 hire typically lands at £40,500-£41,500 before kit, software or recruitment · a 16-19% uplift. First-year all-in planning rules run 1.25-1.4× salary once one-offs are counted.
What is employer NI in 2026/27?
15% on everything above the £5,000 secondary threshold, no ceiling. The 2025 changes (rate up from 13.8%, threshold slashed from £9,100) added roughly £900 per £30,000 employee · the single biggest recent rise in employment costs, partially offset for small firms by the bigger Employment Allowance.
What is the Employment Allowance?
A £10,500/year reduction in employer NI for eligible businesses (broadly, not sole-director-only companies). It wipes out employer NI on roughly the first two average salaries · which materially changes the cost of hires one and two. Run our dedicated Employment Allowance tool for your payroll.
Who pays the Apprenticeship Levy?
Employers with pay bills over £3m: 0.5% of the total bill minus a £15,000 allowance. Small businesses never pay it but can still use levy-funded apprenticeship training · often 95-100% funded.
What hidden costs should I budget?
Recruitment (agency fees 15-25% of salary), equipment and software (£1,000-£3,000), training, insurance uplifts, and cover for holiday and sickness. And remember the asymmetry: a mis-hire costs all of the above twice.
For informational purposes only · 2026/27: employer NI 15% above £5,000, auto-enrolment employer minimum 3% of qualifying earnings (£6,240-£50,270 band approximated on full salary here), Apprenticeship Levy 0.5% over £3m pay bills, Employment Allowance £10,500 · Not accounting advice