Employer National Insurance Calculator

How employer National Insurance is calculated in 2026/27

Employer (secondary Class 1) National Insurance is 15% of each employee’s earnings above the secondary threshold of £5,000 a year. There is no upper limit, so the charge keeps rising with pay, and it is on top of the salary rather than deducted from it.

Payroll software applies the threshold per pay period, not annually: HMRC publishes it as £96 a week or £417 a month for 2026/27. That means an employee paid unevenly, such as one large bonus month, can generate slightly more employer NI over the year than an annual calculation suggests. Directors are the exception, because their NI is normally worked out on an annual earnings period.

The table shows the annual cost for one employee at common salaries before any Employment Allowance. The “total cost” column is salary plus employer NI only; pension contributions and the Apprenticeship Levy are extra.

Employment Allowance: who can claim it and what it is worth

Employment Allowance cuts an eligible employer’s annual Class 1 NI bill by up to £10,500. You do not receive a payment: payroll simply stops charging employer NI until the allowance is used up or the tax year ends. Since April 2025 the old rule that excluded employers with more than £100,000 of employer NI in the previous year has gone, so larger employers can now claim too.

Worked example: a business with 4 staff each earning £28,000 would owe £13,800 of employer NI. After claiming the allowance it pays £3,300, a saving of £10,500.

• You cannot claim if your company’s only employee paid above the secondary threshold is a director – the classic one-person limited company.
• Payments to domestic staff such as a nanny or gardener do not count, unless they are care or support workers.
• Workers caught by the off-payroll (IR35) rules are excluded from the claim.
• Only one company in a group of connected companies can claim, and you can only claim against one payroll.

Employees with reduced or zero employer NI

Employers pay 0% NI on earnings up to £50,270 a year for employees under 21, apprentices under 25 and eligible veterans. These are the “upper secondary thresholds”, and they work through the employee’s NI category letter, so the saving only happens if payroll records the right letter.

Example: a 19-year-old on £24,000 would normally cost £2,850 in employer NI. Under the under-21 relief the charge is nil, because the whole salary is below the £50,270 upper secondary threshold. Above that level the normal 15% applies to the excess.

Eligible new employees working in a Freeport or Investment Zone tax site carry a lower upper secondary threshold of £25,000, which limits the relief to earnings up to that figure.

Class 1A and 1B: employer NI on benefits

Benefits in kind such as company cars, private medical insurance and fuel attract Class 1A NI at 15% of the taxable value, paid once a year after the P11D(b) is filed. PAYE Settlement Agreements, where the employer pays the tax on minor or irregular benefits, carry Class 1B at the same rate on the benefit and on the tax paid.

From 6 April 2027, payrolling of company cars, car fuel, vans, van fuel and private medical benefits becomes mandatory. HMRC will take these benefits out of employees’ tax codes so that tax is collected in real time through each payslip instead of through a code adjustment.

Lawful ways to reduce the employer NI bill

Pension salary sacrifice is the most common route: every £1 of salary an employee gives up in exchange for an employer pension contribution saves the employer 15% in NI. On a £3,000 sacrifice that is £450 a year per employee, which many employers share by topping up the pension. Budget 2025 announced that from April 2029 NI relief on pension salary sacrifice will be limited to the first £2,000 a year per employee, so plans built around larger sacrifices will need reviewing.

Large employers should also budget for the Apprenticeship Levy: 0.5% of the annual pay bill, offset by a £15,000 allowance, so it only bites once the pay bill passes £3 million.

• Check category letters for under-21s, apprentices and veterans at every new starter.
• Claim Employment Allowance at the start of the tax year in your payroll software – it is not applied automatically.
• Model pay rises and bonuses including employer NI: a £1,000 rise costs the business £1,000 plus employer NI on top.