Employer NI Calculator

How to use this calculator

1. Check the thresholds firstThe secondary threshold and the rate have both moved sharply in recent years. The override panel exists so this stays correct after each April.
2. Set the NI category correctlyUnder-21s, apprentices under 25 and veterans in their first civilian year are zero-rated up to the upper secondary threshold. That is a large saving and it is frequently missed.
3. Claim the Employment Allowance if eligibleIt is worth up to £10,500 a year, applies once per business rather than per employee, and is claimed through payroll. Single-director companies with no other employees cannot claim it.
4. Enter salary sacrifice separatelySacrifice reduces the pay employer NI is charged on, which is the main reason employers offer these schemes at all.

The cost nobody sees on a payslip

Employer National Insurance is a genuinely separate tax from the employee's contribution. It is levied on the employer, calculated on the same gross pay, and never appears on the worker's payslip.

That invisibility is why the true cost of employing someone surprises people. A £35,000 salary is not a £35,000 cost, and the gap is larger than most budgets assume.

The calculation itself is simple: everything above the secondary threshold is charged at the secondary rate. There is no upper limit, so unlike the employee charge, it does not taper off at higher salaries — the marginal cost of a pay rise is the same at £30,000 as at £300,000.

What complicates it are the reliefs. The Employment Allowance offsets the bill for most employers, and because it is a fixed amount rather than a percentage, it matters far more to a small employer than a large one. For a business with two or three staff it can wipe out the charge entirely.

Eligibility has conditions. A company where the sole employee is also a director cannot claim, which catches out a great many one-person limited companies. Public sector bodies and businesses doing more than half their work in the public sector are also generally excluded.

The zero-rate categories are the other significant relief. Employing someone under 21, an apprentice under 25, or a veteran in their first year of civilian employment removes the charge entirely up to the upper secondary threshold — currently the same figure as the employee upper earnings limit.

For a role paying under that threshold, that means no employer NI at all. It is a substantial subsidy and a genuine reason to consider a younger candidate or an apprentice where the role allows.

The Apprenticeship Levy sits on top for larger employers, charged on the total pay bill above an annual allowance. Most small and medium businesses never reach it.

Worked example: one employee on £35,000

With a secondary threshold of £5,000 and a rate of 15%, the charge is (£35,000 − £5,000) × 15% = £4,500.

So a £35,000 salary costs £39,500 before pension, equipment or anything else. That is 12.9% on top of pay.

Now claim the Employment Allowance. At £10,500 it exceeds the whole bill, so the charge falls to zero. For a single employee at this salary, the allowance covers everything.

That is the small-employer picture, and it is worth stating plainly: many businesses with one or two staff pay no employer NI at all, and a surprising number do not realise the allowance exists.

Now scale up. Ten employees on £35,000 each gives £45,000 of employer NI. The allowance covers £10,500 of it, leaving £34,500 — because the allowance is per business, not per employee.

That is 9.86% of a £350,000 pay bill, against 12.9% for a single employee before the allowance. The allowance dilutes as headcount grows, which is why it matters enormously to a two-person business and barely at all to a large one.

The Apprenticeship Levy does not apply at this size. It is 0.5% of the whole pay bill less a £15,000 allowance offset against the levy itself, so it only becomes payable once the pay bill passes £3 million — roughly 85 employees at this salary.

Now change the category. If that employee were under 21, the gross charge would be nothing at all — the entire £35,000 sits below the £50,270 upper secondary threshold, so the zero rate covers all of it.

At £60,000 an under-21 would be charged only on the £9,730 above the upper threshold, which is £1,459.50 against £8,250 at the standard rate — a gross saving of £6,790.50 before any allowance.

Finally, salary sacrifice. Sacrificing £5,000 into a pension reduces the pay subject to employer NI to £30,000, cutting the gross charge from £4,500 to £3,750. That £750 saving is what funds many sacrifice schemes, and it is why some employers pass part of it back into the employee's pension.

Employer NI on common salaries

These are before the Employment Allowance, which for most small employers removes the first £10,500. Notice how the zero-rate column only starts to bite above the upper secondary threshold — for any role paying under £50,270, employing someone under 21 or an apprentice under 25 removes employer NI entirely.

Reliefs, directors and what this excludes

The Employment Allowance is claimed through payroll software by ticking a box on the Employer Payment Summary. There is no application. It applies from the point you claim, and you can claim retrospectively for up to four previous tax years if you were eligible and did not.

That retrospective route is worth checking. A business that has never claimed and has been eligible for several years may be owed a substantial refund.

The single-director exclusion is the one that catches most people. If the only person on the payroll is a director, no allowance is available. Adding a second employee on any meaningful salary restores eligibility, which is why some one-person companies employ a spouse — though that only works if the employment is genuine and the pay is commercially justifiable.

Directors have a different NI calculation altogether. They use an annual earnings period rather than a per-pay-period one, so contributions are worked out cumulatively across the year rather than month by month. This calculator uses the ordinary employee basis and will not match a director's payroll exactly.

Freeport and Investment Zone reliefs offer further zero-rating for eligible employers in designated sites, with their own thresholds and conditions. They are narrow but valuable where they apply.

On what is excluded here: this covers Class 1 secondary contributions on cash earnings only. Class 1A on benefits in kind is a separate annual charge, payable on the taxable value of company cars, private medical insurance and similar. If you provide benefits, add that on top.

Statutory payments work differently again. Employers can usually reclaim a proportion of statutory maternity, paternity and adoption pay, and small employers can reclaim more than the standard rate through Small Employers' Relief. None of that is modelled here.

Finally, a planning note. Because employer NI has no upper limit, the marginal cost of every pay rise is constant. A £1,000 rise costs £1,150 whatever the salary — which makes non-cash benefits, pension contributions and salary sacrifice relatively more attractive at the top end than the headline rates alone suggest.

Assumptions and limitations

• Thresholds, rate and Employment Allowance change each April — check GOV.UK and override
• Uses the ordinary employee basis, not the annual earnings period directors use
• Covers Class 1 secondary on cash pay only — Class 1A on benefits is a separate charge
• Does not model Freeport or Investment Zone reliefs
• Does not model statutory payment recovery or Small Employers' Relief
• Assumes the same salary and category for every employee entered
• Not financial or payroll advice — confirm with your accountant or payroll provider

Questions people ask about this in United Kingdom