Cost of employing someone
On top of salary, employers pay 15% National Insurance on earnings above £5,000 and at least 3% pension contributions. Work out the full yearly and monthly cost.
Employer costs by salary
| Salary | Employer NI | Pension (3% qualifying) | Total cost | Employee takes home |
|---|---|---|---|---|
| £15,000 | £1,500 | £263 | £16,763 | £14,320 |
| £25,000 | £3,000 | £563 | £28,563 | £21,520 |
| £30,000 | £3,750 | £713 | £34,463 | £25,120 |
| £40,000 | £5,250 | £1,013 | £46,263 | £32,320 |
| £60,000 | £8,250 | £1,321 | £69,571 | £45,357 |
| £100,000 | £14,250 | £1,321 | £115,571 | £68,557 |
The gap between what the business pays and what the employee receives is large: on a £40,000 salary, the employer spends about £46,263 and the employee keeps £32,320.
Employment Allowance
Most employers can reduce their employer National Insurance bill by up to £10,500 a year. It is not available to companies whose only employee is a director.
Other costs
- Apprenticeship Levy: 0.5% of the pay bill above £3 million.
- Employer pension: auto-enrolment minimum 3% of qualifying earnings (£6,240 to £50,270).
- Holiday, sick pay, equipment and recruitment are extra.
FAQ
What is the employer National Insurance rate?
15% on each employee's earnings above the secondary threshold of £5,000 a year. There is no upper limit.
Do employers pay NI for under-21s and apprentices?
Not on earnings up to the upper secondary threshold (equal to the upper earnings limit) for employees under 21 and apprentices under 25.