Employer National Insurance 2026/27: Rates and Examples

Employer National Insurance for 2026/27 is charged at 15% on each employee's earnings above the secondary threshold of £5,000 a year (£417 a month, £96 a week). Eligible employers can reduce their bill with the Employment Allowance of £10,500. On a £30,000 salary, the employer pays £3,750 a year before any allowance.

Those rates have applied since 6 April 2025, when the rate rose from 13.8% to 15% and the threshold fell from £9,100 to £5,000. They are unchanged for the 2026/27 tax year. This guide explains how employer National Insurance works, who pays what, and how to work out the cost of a hire with clear numbers.

Employer NIC rates and thresholds for 2026/27

These figures come from HMRC's "Rates and thresholds for employers 2026 to 2027" page and apply from 6 April 2026 to 5 April 2027.

Item	2026/27 figure
Secondary Class 1 rate (employer)	15%
Secondary threshold	£96 a week, £417 a month, £5,000 a year
Upper secondary thresholds (under 21, apprentices under 25, veterans)	£967 a week, £4,189 a month, £50,270 a year
Freeport and Investment Zone upper secondary threshold	£481 a week, £2,083 a month, £25,000 a year
Employment Allowance	£10,500 a year
Class 1A (benefits in kind)	15%
Employee primary threshold	£242 a week, £1,048 a month, £12,570 a year
Employee main rate	8% to the upper earnings limit, 2% above

The employee's contributions come out of their pay. The employer's contributions are an extra cost on top of gross salary. If the difference between the two still confuses you, our guide to gross pay vs net pay sets it out step by step.

What changed in April 2025, and what stayed the same in 2026

The Autumn Budget 2024 made three changes from 6 April 2025:

• The employer rate rose from 13.8% to 15%.
• The secondary threshold fell from £9,100 to £5,000 a year.
• The Employment Allowance rose from £5,000 to £10,500, and the rule stopping employers with a previous-year Class 1 bill of £100,000 or more from claiming it was removed.

For 2026/27 the rate, threshold and allowance are the same. The government said at the time that the threshold would stay at £5,000 until April 2028 and then rise with inflation, but check future Budgets for any change. The lower threshold matters most to small employers with part-time staff: someone earning £9,000 a year cost nothing in employer contributions before April 2025, and now costs £600.

How to calculate employer National Insurance

The basic formula is simple:

1. Take the employee's gross earnings for the period.
2. Subtract the secondary threshold for that period (£96 weekly, £417 monthly, £5,000 annually).
3. Multiply what is left by 15%. If the result is negative, the charge is zero.
4. For under-21s, apprentices under 25 and eligible veterans, use 0% up to the upper secondary threshold and 15% above it.
5. Subtract any Employment Allowance you have left for the year.

Payroll software does this every pay period and reports it to HMRC through Real Time Information. You pay HMRC monthly, or quarterly if your total PAYE bill is small enough. The examples below use annual figures so the arithmetic is easy to follow.

Worked examples

Example 1: one full-time employee on £30,000

Earnings above the threshold: £30,000 minus £5,000 equals £25,000. Employer contributions: £25,000 times 15% equals £3,750 a year, roughly £312 a month. The true cost of the hire before pension contributions is £33,750.

Example 2: part-time employee on £9,000

£9,000 minus £5,000 equals £4,000. £4,000 times 15% equals £600 a year. The employee pays no National Insurance themselves, because £9,000 is below the £12,570 primary threshold, but the employer still pays.

Example 3: 19-year-old on £22,000

Because the employee is under 21 and earns less than £50,270, the employer rate is 0%. Employer contributions are £0. If the same person earned £55,000, the employer would pay 15% on £4,730 (£55,000 minus £50,270), which is £709.50.

Example 4: café with five staff on £24,000 each

Step	Amount
Earnings above threshold per employee (£24,000 minus £5,000)	£19,000
Employer contributions per employee (15%)	£2,850
Total for five employees	£14,250
Less Employment Allowance	minus £10,500
Employer National Insurance actually paid	£3,750

The allowance is used up against the first payments of the year, so the café pays nothing for the first few months and then pays the full amount each month once the £10,500 is exhausted. Build that into your cash flow forecast so the later months are not a surprise.

Example 5: one-person limited company

A director who is the company's only employee takes a salary of £12,570. Employer contributions are £7,570 times 15%, or £1,135.50. The Employment Allowance is not available, because the director is the only employee paid above the secondary threshold. A salary of £5,000 or less would avoid employer contributions entirely. Many directors still choose a salary around £12,570 because the salary and the employer contributions both reduce corporation tax, but the best figure depends on your profits and other income. We cover how salary and dividends combine in our guide to dividend tax rates for 2026/27.

The Employment Allowance in detail

The Employment Allowance reduces your employer National Insurance bill by up to £10,500 a year. Under the GOV.UK eligibility rules:

• You must be a business or charity with employees, and do less than half your work in the public sector.
• If you have one director, they must not be the only employee liable for secondary Class 1 contributions.
• You cannot include people employed for personal, household or domestic work, such as a nanny or gardener (care and support workers are an exception).
• Only one company in a group of connected companies can claim.
• Since April 2025, a large previous-year bill (£100,000 or more) no longer stops you claiming.

You claim through your payroll software, usually by ticking the allowance on your Employer Payment Summary. If you forget, you can usually claim for earlier years, but different rules apply, so check GOV.UK.

Other employer contributions to know

• Class 1A: 15% on most taxable benefits in kind, such as a company car or private medical cover, paid annually after you report benefits.
• Class 1B: 15% on items in a PAYE Settlement Agreement, such as some staff entertainment.
• Off-payroll workers: if a medium or large client engages a contractor through their own company and the role falls inside the off-payroll rules, the fee payer pays employer contributions on the deemed payment. See our guide to IR35 and the off-payroll rules.
• Salary sacrifice: pension salary sacrifice currently reduces both employer and employee contributions. The Budget 2025 announced a cap on the National Insurance relief for sacrificed pension contributions from April 2029, so check the final rules before redesigning any scheme.

How employer costs affect your pricing

Employer National Insurance is a direct labour cost, so it should be in every quote and rate you set. A simple approach for a service business:

1. Work out the full annual cost of each employee: salary, employer contributions, pension contributions and any benefits.
2. Estimate the billable hours that employee can realistically deliver in a year, after holidays, training and admin.
3. Divide cost by billable hours to get a cost per hour, then add overheads and profit margin.

For the £30,000 employee in Example 1, the cost before pension is £33,750. With 1,400 billable hours a year, that is about £24.11 an hour before overheads and profit. If you charge clients £35 an hour, your margin per hour is about £10.89 before rent, software and other costs. Our guides to setting rates and building a small business budget help you take this further.

Should you hire an employee or use a contractor?

Employer National Insurance is one reason small businesses compare hiring staff with engaging freelancers. Take a role worth £28,000 a year.

Option	Annual cost to you (before pension and overheads)	Notes
Employee on £28,000	£28,000 plus £3,450 employer contributions = £31,450	Less any unused Employment Allowance
Self-employed freelancer invoicing £31,450	£31,450	No employer contributions, but no control over how they work
Contractor through their own company, small client	Agreed fee	Contractor's company decides status

On cost alone, the numbers look similar once the freelancer prices in their own tax and lack of holiday pay. The real decision is about control and status. If you control how, when and where someone works, they may be an employee whatever the contract says, and HMRC can collect the missing contributions. Do not choose freelancers just to avoid employer costs. If the Employment Allowance would cover most of your bill, a direct hire may cost less than you think.

A quick rule of thumb for a first hire: if you will employ two or three people on ordinary salaries and you are eligible for the allowance, your employer National Insurance bill could be zero or close to it. For example, three staff on £20,000 each create £2,250 of contributions per person, £6,750 in total, which is fully covered by the £10,500 allowance. The bill only starts once total contributions pass £10,500 in the tax year.

Paying HMRC and keeping records

Employer contributions are paid to HMRC with PAYE income tax and employee contributions:

• Payments are due by the 22nd of the following tax month if you pay electronically (tax months run from the 6th to the 5th).
• If your average monthly PAYE bill is less than £1,500, you may be able to pay quarterly instead.
• Each payday you send a Full Payment Submission. Allowance claims and other adjustments go on an Employer Payment Summary.
• Keep payroll records for at least three years after the end of the tax year they relate to.

Directors of their own companies often weigh salary against dividends. Our guide to sole trader vs limited company explains how payroll fits into the wider choice of business structure.

Common mistakes small employers make

• Forgetting that part-time staff earning over £5,000 a year now trigger employer contributions.
• Using the wrong category letter for under-21s or apprentices, and paying 15% when 0% was due.
• Claiming the Employment Allowance as a single-director company with no other employee above the threshold.
• Not budgeting for the jump in monthly payments once the allowance is used up.
• Treating the employer cost as if it came out of the employee's pay. It does not; it is a separate business cost.

Payslips should show the employee's deductions but not the employer's contributions as a deduction. See our salary slip format guide for a clear layout.

This article is general information, not tax advice. Payroll rules have many special cases, so check with a qualified accountant or payroll adviser for your business.

Conclusion

For 2026/27, employer National Insurance is 15% on earnings above £5,000, with a £10,500 Employment Allowance for eligible businesses and 0% rates for under-21s and young apprentices up to £50,270. Know those numbers, build them into your prices, and your payroll costs will not catch you out. When you bill clients for the work your team delivers, our free UK invoice generator makes professional invoices in minutes. More guides are in our business finance section.