Employing someone on a £20,000 salary costs £22,663 per year (£1,889 per month) once you add employer NI at 15% and minimum auto-enrolment pension. That is £2,663 above the headline salary — a 13.3% uplift employers need to budget for before the first payslip.
£1,889 per month total employer cost.
£188 per month employer NI (£2,250 per year).
£2,663 per year above salary (13.3%).
| Item | Annual | Monthly |
|---|---|---|
| Salary | £20,000 | £1,667 |
| Employer NI (15% above £5,000) | £2,250 | £188 |
| Employer pension (3% minimum) | £413 | £34 |
| Total employer cost | £22,663 | £1,889 |
Employer NI for 2025/26 is charged at 15% on earnings above the £5,000 secondary threshold. The first £5,000 of salary is exempt.
| Earnings band | Rate | NI due |
|---|---|---|
| Up to £5,000 | 0% | £0 |
| £5,001 to £20,000 | 15% | £2,250 |
| Total NI (2025/26) | £2,250 |
Employment Allowance reduces the annual employer NI bill by up to £10,500 for eligible businesses and charities. Solo-director companies are excluded.
Without allowance: £2,250 employer NI per year.
With full £10,500 allowance applied: £0 NI due after offset.
From 6 April 2025, employer NI increased from 13.8% to 15% and the secondary threshold fell from £9,100 to £5,000. Both changes increase cost simultaneously — a higher rate applied to a wider NIable base.
2024/25 NI on this salary: £1,504 (13.8% above £9,100).
2025/26 NI on this salary: £2,250 (15% above £5,000).
Increase: £746 (49.6% more than 2024/25).
The figures above use 3% employer pension and no Employment Allowance. Use the full calculator to model different pension rates, overhead costs, and allowance scenarios.
Tax year 2025/26. Employer NI calculated at 15% on earnings above the £5,000 secondary threshold per HMRC rates and thresholds guidance. Auto-enrolment pension at employer minimum 3% on qualifying earnings between £6,240 and £50,270 per The Pensions Regulator guidance. Employment Allowance eligibility must be confirmed with HMRC or your accountant — this page shows both with and without scenarios. Overhead costs are excluded from this page — use the full calculator to include them.
Estimates only — not financial or legal advice. Sources: HMRC · The Pensions Regulator