Employer cost calculator 2026/27
Work out what an employee costs your business once employer National Insurance, the Employment Allowance, the apprenticeship levy and the workplace pension are added to the salary.
Employer National Insurance on this salary is £5,550.00 a year, and the figures above set no Employment Allowance against it.
One allowance of £10,500 covers a whole payroll for the year, not each employee, and connected companies and charities share one between them. A limited company cannot claim it at all where its director is the only employee paid above the £5,000 secondary threshold, and a claim has to be made for each tax year.
The apprenticeship levy is 0.5% of an employer's pay bill, and 0.5% of this one salary of £42,000 is £210.00. That does not exceed the £15,000 levy allowance, so a payroll this size pays no levy. Enter your whole pay bill above if you employ other people.
What each salary costs to employ
These four rows price the employment itself: no Employment Allowance and no apprenticeship levy, whatever you have answered above. Both belong to the employer and not to one job — one allowance covers your whole payroll for the year, and the levy is charged on your whole pay bill — so neither can be split four ways down a column of salaries. That is why a row here can read less than the card above it for the same salary.
What this figure leaves out
The total is the salary, employer National Insurance after any Employment Allowance you claim, the apprenticeship levy and your pension contribution. It is not your whole cost of the role: employer's liability insurance, equipment, software, recruitment fees, training and the cost of the space someone works in all sit on top, and none of them is set by a tax rule we can look up.
Two charges are left out on purpose. Class 1A National Insurance on taxable benefits — a car, private medical cover — is charged on the benefit rather than on pay, so it belongs to the benefit and not to the salary. And employer National Insurance on a termination payment above £30,000 is charged when the job ends rather than while the job runs, so the redundancy pay calculator below works that one out instead of this page. The Employment Allowance cannot be set against either of those.
Common questions
What does an employee really cost?
On a salary of £42,000, employer National Insurance adds £5,550.00 and the minimum workplace pension adds £1,072.80, so the cost of employment is £48,622.80 a year — 15.8% on top of the salary itself. Anything else your business spends on the role, from equipment to insurance, sits on top of that again.
How is employer National Insurance worked out?
At 15% of everything the employee earns above £5,000 a year. There is no upper limit, so unlike the employee's own National Insurance it does not fall away on higher pay.
Can the Employment Allowance cover this?
The Employment Allowance is £10,500 a year, or the employer National Insurance you owe if that is less. On £42,000 the bill is £5,550.00, so claiming it would leave £0.00. It is one allowance for your whole payroll for the year and not one for each employee, connected companies and charities share one between them, and a limited company cannot claim it where its director is the only employee paid above the £5,000 secondary threshold. It comes off employer Class 1 National Insurance only — not income tax, not the employee's own National Insurance, not student loan deductions and not the apprenticeship levy.
Do I pay the apprenticeship levy?
The levy is 0.5% of your pay bill for the year, with an allowance of £15,000 against it, so an employer starts paying once the pay bill passes £3,000,000. The pay bill is everything you pay that is subject to employer Class 1 National Insurance, including pay below the thresholds at which you actually hand any over.
Why is the pension not a share of the whole salary?
The legal minimum is worked out on qualifying earnings: the slice of pay between £6,240 and £50,270. On £42,000 that slice is £35,760.00. Many employers pay their contribution on the whole salary instead, which costs more and is what staff usually compare between offers.