UK Payroll Calculator 2025/26

Calculate complete payroll costs including PAYE, National Insurance, pension contributions, student loans, and total employment costs for UK employers.

Gross Annual Salary Before any deductions

Pay Frequency

Tax Code Standard code for 2025/26

Student Loan Plan

Employee Pension (%) Minimum 5% under auto-enrolment

Employer Pension (%) Minimum 3% under auto-enrolment

Pension Contribution Basis

Pension Tax Relief

Apply Employment Allowance (reduces employer NI by up to £5,000)

Complete Payroll Breakdown

National Insurance Rates 2025/26

National Insurance contributions are payable by both employees and employers. The rates and thresholds for the 2025/26 tax year (6 April 2024 to 5 April 2025) are:

Employee NI (Main Rate)

On earnings £12,570 to £50,270

Employee NI (Upper Rate)

On earnings above £50,270

Employer NI

13.8%

On earnings above £9,100

Employment Allowance

£5,000

Annual reduction for eligible employers

NI Thresholds 2025/26

Threshold	Weekly	Monthly	Annual
Lower Earnings Limit (LEL)	£123	£533	£6,396
Primary Threshold (Employee)	£242	£1,048	£12,570
Secondary Threshold (Employer)	£175	£758	£9,100
Upper Earnings Limit (UEL)	£967	£4,189	£50,270

Employee NI Rate Change: The employee NI rate was reduced from 10% to 8% in April 2024, following an earlier reduction from 12% to 10% in January 2024. This puts more money in employees' pockets.

Income Tax Rates 2025/26

Income tax is calculated after deducting the Personal Allowance. For most employees with tax code 1257L, this means:

Band	Rate	Taxable Income (England/Wales/NI)
Personal Allowance	0%	Up to £12,570
Basic Rate	20%	£12,571 to £50,270
Higher Rate	40%	£50,271 to £125,140
Additional Rate	45%	Over £125,140

Personal Allowance Reduction: For income over £100,000, the Personal Allowance reduces by £1 for every £2 earned above £100,000. It's completely lost at £125,140, creating an effective 60% marginal tax rate between £100,000 and £125,140.

Scottish Tax Rates 2025/26

Scotland has different income tax rates. If your employee has a Scottish tax code (starts with 'S'), use these rates:

Band	Rate	Taxable Income
Starter Rate	19%	£12,571 to £14,876
Basic Rate	20%	£14,877 to £26,561
Intermediate Rate	21%	£26,562 to £43,662
Higher Rate	42%	£43,663 to £75,000
Advanced Rate	45%	£75,001 to £125,140
Top Rate	48%	Over £125,140

Workplace Pension Auto-Enrolment

Since 2012, employers must automatically enrol eligible workers into a workplace pension scheme. Here are the key requirements for 2025/26:

Minimum Contributions

Who Pays	Minimum %
Employer	3%
Employee	5%
Total	8%

Qualifying Earnings Band

Lower Limit: £6,240 per year
Upper Limit: £50,270 per year
Contributions calculated on earnings within this band
Some schemes use full salary instead

Who Must Be Auto-Enrolled?

Aged between 22 and State Pension age
Earning over £10,000 per year
Working in the UK

Employer Benefit: Employer pension contributions are not subject to employer NI, making them a tax-efficient way to increase employee remuneration. A £1,000 pension contribution costs less than a £1,000 salary increase.

Student Loan Repayment Thresholds 2025/26

If your employee has a student loan, deductions are made through payroll once they earn above the relevant threshold:

Plan Type	Annual Threshold	Repayment Rate	Who Has This
Plan 1	£24,990	9%	Pre-September 2012 (England/Wales) or Scotland/NI
Plan 2	£27,295	9%	Post-September 2012 (England/Wales)
Plan 4	£31,395	9%	Scotland (post-1998)
Plan 5	£25,000	9%	Post-August 2023 (England)
Postgraduate Loan	£21,000	6%	Master's or doctoral loans

Multiple Loans: If an employee has both an undergraduate and postgraduate loan, both are repaid simultaneously at their respective rates. The combined repayment can be up to 15% of earnings above the lowest threshold.

Employment Allowance 2025/26

The Employment Allowance allows eligible employers to reduce their annual employer Class 1 NI liability by up to £5,000.

Eligibility Criteria

Employer NI liability in previous tax year was under £100,000
Business is not a public body or household employer
Company or its connected companies have at least one employee
Not more than 50% of work is in public sector (for certain companies)

How It Works

The allowance is applied against your employer NI liability each pay period until the £5,000 is used up. For most small businesses, this means paying no employer NI for the first few months of the year.

Example: An employee earning £30,000 generates approximately £2,884 employer NI per year. With Employment Allowance, a business with one employee would pay no employer NI, and the remaining allowance (£2,116) carries forward to use against future NI or another employee.

Apprenticeship Levy

Larger employers with annual pay bills over £3 million must pay the Apprenticeship Levy.

How It's Calculated

Rate: 0.5% of total pay bill
Allowance: £15,000 per year
Threshold: Only applies if pay bill exceeds £3 million

Example Calculation

For a £5 million pay bill:

Levy before allowance: £25,000
Annual allowance: -£15,000
Annual levy due: £10,000

Using the Levy: Levy payments go into a digital apprenticeship service account to spend on apprenticeship training. Unused funds expire after 24 months. Levy-paying employers can also transfer up to 25% of their levy to other employers.

Frequently Asked Questions

What is the employer National Insurance rate for 2025/26?

For 2025/26, employers pay 13.8% National Insurance (Class 1 Secondary) on employee earnings above the Secondary Threshold of £9,100 per year (£175 per week, £758 per month). Unlike employee NI, there is no upper limit on employer NI contributions - it continues at 13.8% on all earnings above the threshold. Eligible employers can claim up to £5,000 Employment Allowance to offset this cost.

What is the Employment Allowance for 2025/26?

The Employment Allowance for 2025/26 is £5,000. Eligible employers can reduce their annual employer Class 1 NI liability by up to £5,000. To qualify, your employer NI liability in the previous tax year must have been under £100,000, and you cannot be a public body or household employer. The allowance is applied against your monthly NI bill until the £5,000 is used up.

What are the minimum pension contributions under auto-enrolment?

Under workplace pension auto-enrolment, the minimum total contribution is 8% of qualifying earnings: employers pay a minimum of 3% and employees pay a minimum of 5%. Qualifying earnings are the portion of salary between £6,240 and £50,270 for 2025/26. Some employers offer higher contribution rates or calculate contributions on the full salary rather than just qualifying earnings.

How is the Apprenticeship Levy calculated?

The Apprenticeship Levy is 0.5% of your total annual pay bill, but only if your pay bill exceeds £3 million. You receive a £15,000 annual allowance to offset against the levy. So if your pay bill is £5 million, the levy would be £25,000 minus the £15,000 allowance = £10,000. Employers with pay bills under £3 million don't pay the levy at all.

How do I calculate the total cost of employing someone?

The total employment cost includes: gross salary + employer NI (13.8% on earnings above £9,100) + employer pension contributions (minimum 3%) + any other benefits. For a £30,000 salary with minimum pension: Employer NI = (£30,000 - £9,100) x 13.8% = £2,884. Employer pension on qualifying earnings = around £1,261. Total cost = approximately £34,145 (before Employment Allowance).

What's the difference between Plan 1, 2, 4, and 5 student loans?

The plans relate to when and where someone studied. Plan 1 covers pre-September 2012 loans in England/Wales and all Scottish/NI loans. Plan 2 covers post-September 2012 loans in England/Wales. Plan 4 covers Scottish loans from 1998 onwards. Plan 5 covers loans from August 2023 onwards (new system). Each has different repayment thresholds, but all use a 9% repayment rate on earnings above the threshold.

Do employer pension contributions attract NI?

No, employer pension contributions are not subject to employer National Insurance. This makes pension contributions a tax-efficient form of remuneration. If you give an employee a £1,000 salary increase, it costs you £1,138 including employer NI. But a £1,000 pension contribution costs just £1,000 - saving 13.8%. Employees also benefit as pension contributions are made before tax.

What is Real Time Information (RTI) payroll reporting?

Real Time Information (RTI) is HMRC's payroll reporting system. Employers must submit Full Payment Submissions (FPS) on or before each pay day, reporting all employee payments and deductions. If no payments are made in a tax month, an Employer Payment Summary (EPS) is required instead. RTI replaced the old P35/P14 year-end returns and gives HMRC up-to-date information about PAYE payments.

Jennifer Clarke

CIPP (Chartered Institute of Payroll Professionals) | AAT Licensed

Jennifer is a Chartered Payroll Professional with over 18 years' experience in UK payroll management. She has managed payroll for businesses from startups to FTSE 250 companies and currently provides payroll consultancy services, specialising in auto-enrolment compliance and payroll system implementations.

UK Payroll Calculator 2025/26 | Employer NI, PAYE & Total Employment Costs