Business PAYE Calculator UK 2025/26

Business PAYE calculator UK 2025/26 — calculate employee tax, NI, employer NI and total cost per employee. Plan payroll

Quick answer: For a small business hiring at £30,000, total payroll cost is £32,884/year — that's £30,000 salary + £2,884 employer NI (13.8% above £9,100 secondary threshold). The employee takes home £25,119.60 after their own tax + NI.
Mustafa Bilgic
Reviewed by Mustafa Bilgic · UK Calculator Editor ·

Calculator

Whether you're hiring your first employee or planning a 20-person team, this PAYE calculator shows the full employer view: gross cost, employer NI, employee deductions and net pay. Useful for SME owners, accountants, and HR teams budgeting headcount.

How business paye calculator works in 2025/26

Running PAYE as a small business has three moving parts:

  1. What you pay HMRC: employee's income tax + NI (deducted from gross) + employer NI (paid on top) + apprenticeship levy if applicable
  2. What the employee receives: gross minus their personal tax + NI deductions
  3. Workplace pension: 8% total contribution (3% employer minimum, 5% employee minimum) on qualifying earnings band

If you're a one-person Ltd Co director, optimal pay structure usually combines a small salary (£12,570 to use full personal allowance and qualify for state pension via NI credit, OR £9,100 to avoid all NI) plus dividends. This calculator covers PAYE-only scenarios — see our salary vs dividends calculator for the optimal split.

Worked example: Sole trader hires first employee at £20k

Salary £20,000 + employer NI (13.8% × £10,900) = £1,504 + pension 3% × £13,760 = £413. Total £21,917/year. Employee take-home £17,919.60.

Gross: £20,000 → Take-home: £17,919.60/year (£1,493.30/month)

Worked example: 5-person team average £35k

Per employee: £35k + £3,575 employer NI + £866 pension = £39,441. Team total £197,205/year. Use Employment Allowance to deduct up to £10,500 from employer NI bill.

Gross: £35,000 → Take-home: £28,719.60/year (£2,393.30/month)

Worked example: Director-only Ltd Co at optimal £12,570 salary

£12,570 salary uses full personal allowance, no income tax, no employee NI. Employer NI = (12,570-9,100) × 13.8% = £479. Director can take £40k+ as dividends taxed at 8.75%.

Gross: £12,570 → Take-home: £12,570.00/year (£1,047.50/month)

Frequently asked questions

Do I need to register for PAYE?
You must register with HMRC as an employer if any employee earns above the lower earnings limit (£125/week 2025/26), receives benefits, has another job, or is paid above tax-free allowance. Sole trader paying themselves does NOT register; Ltd Co director paying themselves DOES.
Can I run PAYE myself or do I need software?
Since 2013, all PAYE submissions must be Real Time Information (RTI) — submitted to HMRC every payroll cycle. You need HMRC-recognised software (free options: HMRC Basic PAYE Tools for ≤9 employees) or commercial (Xero, BrightPay, Sage, FreeAgent).
What is Employment Allowance and can I claim it?
£10,500/year (2025/26) deduction from employer NI bill. Eligibility: most small businesses except (a) single-director Ltd Cos with no other employees, (b) employers with prior-year secondary NI bill > £100k, (c) public bodies.
When do I pay PAYE to HMRC?
Monthly: by 22nd of the following month if paying electronically (19th if by cheque). Quarterly: by 22nd if total monthly liability under £1,500. Late payment incurs interest at 7.75% (2025/26 base rate + 2.5%).
What about CIS for construction subcontractors?
Construction Industry Scheme (CIS) requires you to deduct 20% (or 30% if subcontractor unverified) from labour-only payments to subcontractors. Different system from PAYE — see our CIS calculator.
Do I owe employer NI on small bonuses?
Yes — bonuses, overtime, shift premiums, commission, and tips all attract employer NI at 13.8% above £9,100/year. Some specific allowances (e.g. business mileage at HMRC AMAP rate) are NI-free.
Can I salary sacrifice to reduce employer NI?
Yes — salary sacrifice reduces gross salary, so employer NI saves 13.8% on the sacrificed amount. Common: pension salary sacrifice can save you £138 per £1,000 sacrificed. Some employers pass this saving to the employee as a pension top-up.

Official UK Sources

Last reviewed: May 2026 against HMRC 2025/26 rates.

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