2026/27 rates + thresholds
- Secondary Threshold: £5,000/year (£96/week)
- Rate above threshold: 15%
- No upper limit — employer NI applies on ALL earnings above ST
Employment Allowance
Up to £10,500 offset against employer NI bill each year. Available to most eligible businesses. Excludes: - Single-director companies with no other employees - Public sector employers - Businesses providing more than 50% work to public sector
Rate exemptions
Zero employer NI on earnings up to £50,270 for: - Under-21s (apprentices under 21) - Apprentices under 25 - Veterans in first 12 months of civilian employment - Freeport + Investment Zone employees (up to £25,000)
Above £50,270 — standard 15% applies.
True cost of employment
For £50,000 salary employee: - Gross salary: £50,000 - Employer NI (15% of £45,000): £6,750 - Auto-enrolment pension (3% of £45,270): £1,358 - Apprenticeship Levy (only >£3m annual pay bill): £0 for most - Total employer cost: ~£58,108
For £100,000 employee: - Gross salary: £100,000 - Employer NI (15% of £95,000): £14,250 - Pension 3%: £2,858 - Total: ~£117,108
Why contractors seem cheaper
Direct comparison: hire a £50k employee (£58k cost) vs hire a £600/day contractor for 200 days (£120k spend). Contractor no employer NI + no pension + no holiday/sick/statutory pay. IR35 legislation exists to counter perceived tax avoidance where the working relationship is effectively employment.
In short
Employer NI in 2026/27 = 15% above £5,000. Employment Allowance covers up to £10,500. True employment cost typically 16-18% above gross salary.