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

Free UK Payroll Calculator for employers. Calculate employee take-home pay, PAYE tax, employer NI contributions, pension costs.

Last updated: February 2026

> Tax> Payroll Calculator

UK Payroll Calculator 2025/26

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

Before any deductions
Standard code for 2025/26
Minimum 5% under auto-enrolment
Minimum 3% under auto-enrolment

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 2025 to 5 April 2026) are:

Employee NI (Main Rate)

8%
On earnings £12,570 to £50,270

Employee NI (Upper Rate)

2%
On earnings above £50,270

Employer NI

15%
On earnings above £5,000

Employment Allowance

£10,500
Annual reduction for eligible employers

NI Thresholds 2025/26

ThresholdWeeklyMonthlyAnnual
Lower Earnings Limit (LEL)£123£533£6,396
Primary Threshold (Employee)£242£1,048£12,570
Secondary Threshold (Employer)£96£417£5,000
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:

BandRateTaxable Income (England/Wales/NI)
Personal Allowance0%Up to £12,570
Basic Rate20%£12,571 to £50,270
Higher Rate40%£50,271 to £125,140
Additional Rate45%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:

BandRateTaxable Income
Starter Rate19%£12,571 to £15,397
Basic Rate20%£15,398 to £27,491
Intermediate Rate21%£27,492 to £43,662
Higher Rate42%£43,663 to £75,000
Advanced Rate45%£75,001 to £125,140
Top Rate48%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 PaysMinimum %
Employer3%
Employee5%
Total8%

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 TypeAnnual ThresholdRepayment RateWho Has This
Plan 1£26,0659%Pre-September 2012 (England/Wales) or Scotland/NI
Plan 2£28,4709%Post-September 2012 (England/Wales)
Plan 4£32,7459%Scotland (post-1998)
Plan 5£25,0009%Post-August 2023 (England)
Postgraduate Loan£21,0006%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 £10,500.

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 £10,500 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.

How the UK Payroll Calculator 2025/26 Works

This calculator helps you understand your UK pay entitlements using current 2025/26 rates and regulations. Whether you are checking statutory pay, overtime calculations, or holiday pay, the results reflect the latest HMRC thresholds and employment law requirements.

UK pay calculations must account for income tax, National Insurance contributions, pension auto-enrolment, and any applicable statutory payments. Employers are legally required to provide itemised payslips showing each deduction, making it easier to verify your pay is correct.

Key Information for 2025/26

The National Living Wage for workers aged 21 and over is £12.21 per hour from April 2025. The personal allowance remains at £12,570, and employee National Insurance is charged at 8% on earnings between £12,570 and £50,270. Workplace pension auto-enrolment requires minimum contributions of 5% from the employee and 3% from the employer.

Example Calculation

An employee working 37.5 hours per week at £15 per hour earns £29,250 per year. After income tax of £3,336 and National Insurance of £1,334, the take-home pay is approximately £24,580 per year or £2,048 per month before pension contributions.

Source: Based on official HMRC 2025/26 rates. Last updated March 2026.

Frequently Asked Questions

What is the employer National Insurance rate for 2025/26?
For 2025/26, employers pay 15% National Insurance (Class 1 Secondary) on employee earnings above the Secondary Threshold of £5,000 per year (£96 per week, £417 per month). Unlike employee NI, there is no upper limit on employer NI contributions - it continues at 15% on all earnings above the threshold. Eligible employers can claim up to £10,500 Employment Allowance to offset this cost.
What is the Employment Allowance for 2025/26?
The Employment Allowance for 2025/26 is £10,500. Eligible employers can reduce their annual employer Class 1 NI liability by up to £10,500. The previous £100,000 eligibility cap has been removed from 2025/26, and you cannot be a public body or household employer. The allowance is applied against your monthly NI bill until the £10,500 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 (15% on earnings above £5,000) + employer pension contributions (minimum 3%) + any other benefits. For a £30,000 salary with minimum pension: Employer NI = (£30,000 - £5,000) x 15% = £3,750. Employer pension on qualifying earnings = around £1,261. Total cost = approximately £35,011 (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 £1,150 including employer NI. But a £1,000 pension contribution costs just £1,000 - saving 15%. 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.
What is the employer NI rate for 2025/26?
Employers pay Class 1 Secondary NI at 15% on employee earnings above £96/week (£5,000/year secondary threshold) from April 2025. The rate increased from 13.8% and the threshold was reduced.
What PAYE records must employers keep?
Employers must keep payroll records for at least 3 years from the end of the tax year. Records include: pay, deductions, tax codes, P45s, P60s, expenses and benefits.
What is a P60?
A P60 is an annual summary of pay, tax deducted and NI contributions issued to employees by 31 May each year. It summarises the full tax year and is needed for tax returns, mortgage applications and benefit claims.
How do I set up payroll for a new employee?
Collect the employee's P45 or starter declaration. Register them with HMRC via RTI. Use their tax code to calculate PAYE. Set up auto-enrolment pension if eligible (aged 22+, earning over £10,000).
UC

Reviewed by: UK Calculator, Founder & Developer

Founder & Developer - UKCalculator.com

The UK Calculator team is the founder and developer of UKCalculator.com, providing free, accurate calculators for UK residents.

Related Calculators

Salary Calculator • Take Home Pay • Hourly Wage Calculator • NI Calculator

Expert Reviewed — This calculator is reviewed by our team of financial experts and updated regularly with the latest UK tax rates and regulations. Last verified: February 2026.

Last updated: February 2026 | Verified with latest UK rates

You May Also Like

HMRC Compliant
Secure & Private
190+ Calculators
Always Free
Pro Tips for Accurate Results
  • Double-check your input values before calculating
  • Use the correct unit format (metric or imperial)
  • For complex calculations, break them into smaller steps
  • Bookmark this page for quick future access
Understanding Your Results

Our Payroll Calculator provides:

  • Instant calculations - Results appear immediately
  • Accurate formulas - Based on official UK standards
  • Clear explanations - Understand how results are derived
  • 2025/26 updated - Using current rates and regulations
Common Questions

Is this calculator free?

Yes, all our calculators are 100% free to use with no registration required.

Are the results accurate?

Our calculators use verified formulas and are regularly updated for accuracy.

Can I use this on mobile?

Yes, all calculators are fully responsive and work on any device.

People Also Ask

Yes, our calculators use verified formulas and are regularly updated with current UK rates and regulations. Results are provided for guidance - always consult professionals for major financial decisions.

Absolutely! All our calculators are fully responsive and work perfectly on smartphones, tablets, and desktops. No app download needed.

We update all calculators with new rates as soon as they're announced - typically at the start of each tax year (April) or when significant changes occur.

Embed This Calculator on Your Website

Free to use. Copy the code below and paste it into your website HTML.

Official Sources

Related Calculators