Employer National Insurance contributions are the NI you pay on top of wages. Employers NI costs you 15% of everything a worker earns above £5,000 a year. Your staff do not pay it. It never comes out of their wages. It is a direct cost to your business.
The rate went up in April 2025. The threshold dropped at the same time. Both changes made hiring more expensive. This guide gives the current rates for 2026/27. It shows how to work out the cost of a hire. It also shows how to cut the bill legally.
Disclaimer: This article gives general information for UK employers. It is not tax or legal advice. Rates change each tax year. Speak to a qualified accountant about your own payroll.
What are employer National Insurance contributions?
Employer National Insurance is a payroll tax on the wages you pay. HMRC calls it a secondary Class 1 contribution. You pay 15% on earnings above the secondary threshold. That threshold is £5,000 a year. The money comes from your business, not your employee’s pay.
Two people pay National Insurance on the same wage. Your employee pays primary Class 1 from their gross pay. You pay secondary Class 1 on top of that wage. HMRC collects both through your PAYE bill.
The money helps fund the state pension, the NHS and statutory benefits. Your contribution does not give your employee anything extra. It is a tax on employing someone.
Category letters decide the rate you pay for each worker. Most staff sit on letter A. Letter M covers under-21s. Letter H covers apprentices under 25. Letter V covers armed forces veterans. Those last three letters carry a zero rate up to £50,270.
What is the employer NI rate for 2026/27?
The employer NI rate is 15% for the 2026/27 tax year. You start paying it on earnings above the secondary threshold. That threshold is £5,000 a year. In weekly terms it is £96, or £417 a month. The same 15% rate applies to every pound above it.
| What HMRC charges you | 2026/27 figure |
|---|---|
| Employer NI rate | 15% |
| Secondary threshold, yearly | £5,000 |
| Secondary threshold, monthly | £417 |
| Secondary threshold, weekly | £96 |
| Zero rate limit, under-21s | £50,270 |
| Zero rate limit, apprentices under 25 | £50,270 |
| Zero rate limit, veterans | £50,270 |
| Class 1A on benefits in kind | 15% |
| Employment Allowance | £10,500 |
These figures come from HMRC's rates and thresholds for employers. Check them again each April. HMRC resets them at the start of every tax year.
How do you calculate employer NI contributions?
Take the employee’s gross pay for the period. Subtract the secondary threshold for that same period. Multiply what is left by 15%. That is your employer NI for that payslip. Payroll software does this for you, but the maths behind it stays simple.
Here is a worker on £30,000 a year. Take £30,000 and subtract the £5,000 threshold. That leaves £25,000 of chargeable pay. Fifteen per cent of £25,000 is £3,750. So the wage costs you £33,750 before pension and other costs.
Monthly payroll uses the monthly threshold. A worker on £2,500 a month clears £417 first. That leaves £2,083 to charge. At 15% you pay £312.45 for that month.
Weekly payroll works the same way with the £96 figure. The threshold never carries over between pay periods. An employee who earns nothing one week keeps the same £96 the next week.
Directors work differently. HMRC lets you use an annual earnings period for a director. That smooths out lumpy salary and bonus payments across the year.
When did employer National Insurance go up?
Employer NI rose on 6 April 2025. The rate went from 13.8% to 15%. The secondary threshold fell from £9,100 to £5,000 on the same day. Both changes landed together. That is why the jump felt bigger than the headline rate suggested.
Look at the same £30,000 worker under the old rules. You subtracted £9,100 and charged 13.8% on £20,900. That came to £2,884.20 a year. The same worker now costs £3,750 in employer NI. That is £865.80 more for one person.
Ten staff on that salary cost you £8,658 more a year. The 15% rate and the £5,000 threshold still apply in 2026/27.
The threshold drop hit small employers hardest. Low-paid and part-time roles used to sit under £9,100 with no NI at all. Most of them now sit above £5,000 and carry a charge.
What does an employee really cost you?
Wages are only part of the bill. Employer NI adds 15% of everything above £5,000. A workplace pension adds more on top. The £5,000 threshold sits low, so even a small part-time wage crosses it. Budget for the full cost, not just the salary line.
Here is the part most guides skip. The National Living Wage is £12.71 an hour from April 2026. An eight-hour week at that rate pays £101.68. The weekly secondary threshold is £96. So one eight-hour day a week already triggers employer NI.
Seven hours a week stays under, at £88.97. One extra hour moves that job from free to chargeable. Saturday staff, cleaners and weekend cover all sit near this line now.
Pension costs sit alongside NI. You must enrol eligible staff into a workplace pension scheme. Those contributions are separate from National Insurance. Our guide to auto-enrolment pension obligations sets out the rates and the duty dates.
Sick pay, holiday cover and equipment add more still. A £30,000 salary is rarely a £30,000 cost.
Most small employers run payroll monthly and check the figures once a year. One error can repeat twelve times before anyone spots it. That is why many businesses hand the job over. Our guide to outsourced payroll services covers NI, category letters, pensions and filing.
Can you reduce your employer NI bill?
Yes. Employment Allowance takes up to £10,500 off your employer NI bill each year. Zero rates cut the cost of hiring under-21s, apprentices and veterans. Salary sacrifice into a pension lowers the pay NI is charged on. All three are legal and widely used.
Employment Allowance is the big one for small employers. It knocks up to £10,500 off your yearly employer NI. You claim it through your payroll software. HMRC does not send it to you automatically.
Not every business can claim it. You must do less than half your work in the public sector. One trap catches a lot of small limited companies. A single-director company cannot claim if that director is the only employee paying secondary NI. Hire one more person and the position changes.
Check the Employment Allowance eligibility rules before you tick the box. The old £100,000 liability cap ended in April 2025. Larger employers can now claim the allowance too.
Connected companies get one allowance between them. You can only claim it against one payroll. Workers inside the off-payroll rules do not count towards your claim.
Age-based zero rates cut the cost of younger staff. You pay no employer NI on an under-21’s pay up to £50,270. Apprentices under 25 get the same treatment. So does a veteran in their first year of civilian work. Use the right category letter or you will pay NI you did not owe.
Salary sacrifice is the third lever. Your employee swaps gross pay for a bigger pension contribution. Lower gross pay means lower employer NI for you. One change is coming though. The NI exemption on sacrificed pension pay gets capped from April 2029. Only the first £2,000 per employee stays free of NI.
Do you pay employer NI on benefits and expenses?
Yes. Benefits in kind carry Class 1A National Insurance at 15%. Company cars, private medical cover and gym memberships all count. You report and pay Class 1A once a year, after the tax year ends. Termination payments above £30,000 also attract Class 1A.
Class 1A sits outside your monthly payroll run. It follows your P11D reporting after 5 April. So a £600 gym membership costs you £90 in Class 1A.
Class 1B works the same way for a PAYE Settlement Agreement. That covers small or irregular expenses in one annual payment. Both classes carry the same 15% rate as normal employer NI.
Small perks add up fast across a team. Ten company phones or ten health plans each carry their own 15% charge.
How employer NI reaches HMRC
Employer NI travels with your PAYE payment. Your payroll software works out the figure at each pay run. You then send HMRC a Full Payment Submission under RTI. One payment covers PAYE tax, employee NI and your employer NI.
Employer NI never appears as a deduction on the payslip. Your employee sees their own NI only. The full filing process is in our guide to PAYE for UK employers.
What do employers get wrong about NI?
Four mistakes come up again and again. Employers forget to claim Employment Allowance. They use the wrong category letter for young staff. They budget on salary alone and miss the 15% on top. They also forget Class 1A on benefits until the bill lands.
The category letter mistake is the quiet one. Payroll staff default to letter A for everyone. An under-21 on letter A costs you 15% you never owed. You can correct past payroll and claim that money back. HMRC accepts claims for earlier tax years too.
The Employment Allowance mistake costs more. Four years of missed allowance adds up to a large sum. Check your payroll settings at the start of each tax year.
The third mistake shows up at hiring time. A £35,000 offer looks affordable next to a £32,000 one. The gap is wider than £3,000 once NI and pension land on top.
Employer NI is not hard to work out. Getting it wrong every month is the expensive part. DASA's payroll service handles the calculations, the category letters and the filing. Get a quote to see current pricing.
Author: Raqeeb Marzook ACCA, Manager at DASA Accountancy. Figures checked against gov.uk on 6 August 2026. For corrections, contact raqeeb@dasaaccountancy.co.uk.
This article gives general information for UK employers. It is not tax advice. Rates change each April, so check the current figures before you budget.
FAQs
What is the employer National Insurance rate?
Employer National Insurance is 15% for the 2026/27 tax year. You pay it on all earnings above the secondary threshold of £5,000 a year.
What is the secondary threshold for employer NI?
The secondary threshold is £5,000 a year. That works out at £417 a month or £96 a week. Earnings above it carry employer NI at 15%.
How do you calculate employer NI contributions?
Subtract the secondary threshold from the employee’s gross pay for that period. Multiply what is left by 15%. A £30,000 salary gives £25,000 chargeable, so £3,750 of employer NI.
When did employer National Insurance go up?
Employer NI rose on 6 April 2025. The rate moved from 13.8% to 15% and the secondary threshold fell from £9,100 to £5,000.
Can you reduce your employer NI bill?
Yes. Employment Allowance cuts up to £10,500 a year. Zero rates apply to under-21s, apprentices under 25 and veterans up to £50,270.
Do employers pay National Insurance on benefits in kind?
Yes. Benefits in kind carry Class 1A National Insurance at 15%. You report and pay it after the tax year ends through P11D reporting.