The headline numbers
For 2026/27, employer Class 1 National Insurance is 15% on each employee's earnings above the secondary threshold of £5,000 a year, £417 a month. Both figures reflect the major April 2025 changes, when the rate rose from 13.8% and the threshold dropped from £9,100, dragging far more part time roles into employer NI. Unlike employee NI there is no upper limit: the 15% runs all the way up the payslip.
The Employment Allowance
The Employment Allowance lets eligible employers knock £10,500 off their employer NI bill for the year, claimed through a simple flag on the EPS and applied automatically until used up. Since April 2025 there is no turnover style cap, so businesses of any size can claim. The key exclusion is single director companies: if the only person paid above £5,000 is a director, no allowance is due, which directly shapes salary strategy in owner managed companies. Our directors' payroll guide works through the options.
Reliefs for young workers and veterans
No employer NI is due on earnings up to £50,270 for employees under 21 (category M) or apprentices under 25 (category H), and a similar relief applies for the first year of a veteran's civilian employment (category V). Freeport and investment zone employers have further reliefs. These only work if the right category letter is set in your software, so audit categories whenever someone has a relevant birthday or an apprenticeship ends.
What an employee really costs
Take a £30,000 salary. Employer NI is 15% of £25,000, £3,750. Add a 3% auto enrolment pension of about £713 and the true cost is £34,463 before the Employment Allowance, roughly 15% above the advertised salary. Run the same maths before every hire and pay rise, and remember the April minimum wage rise feeds straight into this calculation for lower paid roles.
Salary sacrifice still works
Employer NI is one reason pension salary sacrifice remains attractive: sacrificed salary avoids employee NI at 8% and employer NI at 15%, and many employers share part of that saving into the pension. Sacrifice must never take pay below the minimum wage, and it slightly reduces earnings based statutory payments, so implement it with advice.
Paying and reporting
Employer NI is calculated each pay run, reported on the FPS and paid to HMRC with the rest of your PAYE bill by the 22nd of the following month. Claim the Employment Allowance afresh each tax year, it does not roll over automatically. From April 2027, Class 1A NI on most benefits in kind moves into the payroll in real time too, covered in our payrolling benefits guide. For help modelling staff costs or restructuring pay efficiently, our payroll team can run the numbers for your exact headcount.
Frequently asked questions
How much is employer National Insurance in 2026/27?
15% on each employee's earnings above the £5,000 secondary threshold. For an employee on £30,000 that is 15% of £25,000, which is £3,750 a year before any Employment Allowance.
Who can claim the £10,500 Employment Allowance?
Most businesses and charities with employer NI liabilities. The former £100,000 eligibility cap was removed in April 2025. The main exclusion is a company whose only employee paid above the threshold is also a director, plus certain public sector employers.
Do I pay employer NI for young staff?
Not below £50,270. Employer NI is 0% on earnings up to £50,270 for employees under 21 and for apprentices under 25, provided the correct category letter is used in payroll.