Employer National Insurance, formally secondary Class 1 National Insurance contributions, is the tax an employer pays on top of each employee's wages. Since 6 April 2025 the rate has been 15 percent on earnings above a much lower threshold of 5,000 pounds a year, which raised costs sharply for most employers. This guide explains how the charge is worked out, the reliefs that reduce it, and what the changes mean for your payroll.
Employer NI Estimator
Enter a gross annual salary to estimate the employer National Insurance due in 2026 before the Employment Allowance.
What Employer National Insurance Is
Employer National Insurance is separate from the National Insurance deducted from an employee's pay. Your staff pay primary Class 1 contributions out of their wages, and you, the employer, pay secondary Class 1 contributions on top as a cost of employment. It does not come out of the worker's salary, so it is a genuine extra cost of hiring rather than a deduction.
You pay it through PAYE each time you run payroll, alongside the income tax and employee National Insurance you collect. The amount is based on each employee's earnings above the secondary threshold, so it rises with pay and with headcount.
The 2026 Rate and Threshold
The secondary rate is 15 percent, charged on the part of each employee's earnings above the secondary threshold of 5,000 pounds a year (about 96 pounds a week). There is no upper limit, so you pay 15 percent on all earnings above the threshold, however high the salary.
These figures took effect on 6 April 2025 and represent a significant increase. The rate rose from 13.8 percent to 15 percent, and the threshold was cut from 9,100 pounds to 5,000 pounds, which means employers now start paying earlier and at a higher rate. For a worker on 30,000 pounds, the annual employer bill rose from around 2,884 pounds to 3,750 pounds.
| Item | Figure |
|---|---|
| Secondary (employer) rate | 15% |
| Secondary threshold | 5,000 pounds a year |
| Weekly threshold | 96 pounds |
| Employment Allowance | 10,500 pounds |
How to Calculate It
Take the employee's gross annual pay, subtract the 5,000 pound threshold, and multiply what is left by 15 percent. For a salary of 30,000 pounds the calculation is 30,000 minus 5,000, which is 25,000, times 15 percent, giving 3,750 pounds a year. For 50,000 pounds it is 45,000 times 15 percent, which is 6,750 pounds.
In practice payroll software works this out for each pay period rather than annually, but the result over a full year is the same. Remember the charge applies per employee, so your total bill is the sum across everyone you employ above the threshold.
The Employment Allowance
The Employment Allowance lets eligible employers reduce their annual employer National Insurance bill by up to 10,500 pounds. If your total bill is below that figure, the allowance can wipe it out entirely, which is why many small employers pay no secondary contributions at all.
To claim, you must be a business or charity with employer National Insurance liabilities, and since April 2025 the previous 100,000 pound cap on eligibility has been removed, widening access. You cannot claim if you are the sole director and only employee of your company, or if more than half your work is in the public sector. You claim through your payroll software by ticking the Employment Allowance option.
Who Pays Less or Nothing
Some groups carry a much higher threshold, so you pay no employer National Insurance until their earnings are far higher. For employees under 21, and apprentices under 25, the threshold is the Upper Secondary Threshold of 50,270 pounds a year, so you pay nothing on most of their pay. Veterans in their first year of civilian employment and eligible employees in a Freeport or Investment Zone also attract relief.
Salary sacrifice is the main legitimate way to reduce the bill on ordinary staff. Because pension contributions made through salary sacrifice reduce gross pay, they also reduce the earnings on which employer National Insurance is charged, saving 15 percent on the sacrificed amount.
Directors, One-Person Companies and Small Employers
Company directors are treated slightly differently because their National Insurance is worked out on an annual, cumulative basis rather than pay period by pay period. This stops directors avoiding contributions by taking irregular pay, and it means the 5,000 pound secondary threshold is applied across the whole year for the company's liability on their salary.
The Employment Allowance is the key relief for small employers, but there is an important exclusion: a company whose only employee is also a director cannot claim it. Many one-person limited companies therefore pay the full 15 percent on director's salary above 5,000 pounds, which is why some directors keep salary near the threshold and take the rest as dividends. Taking on a second employee earning above the threshold can restore eligibility for the allowance.
For growing businesses, the combination of the lower threshold and higher rate since April 2025 means employer National Insurance is now a larger share of payroll cost than before. Modelling the full cost of each hire, salary plus employer National Insurance plus pension, is essential before you commit to a new role.
Reporting and Paying
You report employer National Insurance to HMRC every time you run payroll through a Full Payment Submission, and you pay it together with income tax and employee National Insurance by the 22nd of the following month if you pay electronically, or the 19th by post. Keep records for at least three years.
If you are budgeting for a new hire, remember the true cost is the salary plus employer National Insurance plus any pension contribution, which is why the 15 percent charge matters when you set pay. Our employer NI and total employment cost calculators work out the exact figures for any salary.
Frequently Asked Questions
What is the employer National Insurance rate for 2026? The employer secondary Class 1 National Insurance rate is 15 percent, charged on each employee's earnings above 5,000 pounds a year. The rate rose from 13.8 percent and the threshold fell from 9,100 pounds on 6 April 2025.
How much employer NI do I pay on a 30,000 pound salary? You pay 15 percent on the earnings above 5,000 pounds, so on 30,000 pounds that is 25,000 times 15 percent, which is 3,750 pounds a year, before any Employment Allowance.
What is the Employment Allowance for 2026? Eligible employers can reduce their employer National Insurance bill by up to 10,500 pounds a year through the Employment Allowance. Many small employers pay no secondary contributions because the allowance covers their whole bill.
Do I pay employer NI for employees under 21? You pay nothing until their earnings reach the Upper Secondary Threshold of 50,270 pounds a year. The same higher threshold applies to apprentices under 25, so employer National Insurance on younger staff is often zero.
Is employer National Insurance taken from the employee's wages? No. Employer National Insurance is an extra cost you pay on top of wages, not a deduction from the employee's pay. The employee separately pays their own primary Class 1 contributions out of their salary.
Can I reduce my employer National Insurance bill? Yes. Claim the Employment Allowance if eligible, use pension salary sacrifice to lower the earnings that are charged, and check whether any staff qualify for under-21, apprentice, veteran or Freeport reliefs.
When do I pay employer National Insurance to HMRC? You pay it monthly with your other PAYE liabilities, by the 22nd of the following month electronically or the 19th by post. Payroll software reports the amount to HMRC each pay run through a Full Payment Submission.
Related Calculators
Employer Ni Calculator | Total Employment Cost Calculator | Corporation Tax 2026 Calculator | Salary Calculator
Related Guides
Business Rates Guide | VAT Guide UK | Working Time Regulations
Official Sources
Figures are based on 2026/27 published UK government rates. This guide is general information only and not financial advice. Last checked September 2026.
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