How does employer National Insurance work in 2026/27?

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Employer National Insurance Contributions (NICs) are a payroll tax paid by employers on top of gross wages. Unlike employee NICs, employer NICs are not deducted from the employee's pay -- they are an additional cost borne entirely by the business. **2026/27 Key Figures** - Rate: 15% (increased from 13.8% in April 2025) - Secondary Threshold (ST): £5,000 per year (£416.67/month, £96.15/week) - Employment Allowance: £10,500 (increased from £5,000 in April 2025) **How the calculation works** For each employee, the employer pays 15% on earnings above the Secondary Threshold of £5,000. **Worked Example -- employee earning £35,000/year** 1. Earnings above ST: £35,000 - £5,000 = £30,000 2. Employer NIC: £30,000 x 15% = **£4,500 per employee** **Employment Allowance** Eligible businesses can reduce their total employer NIC bill by up to £10,500 per tax year. To qualify, your employer NIC bill must have been less than £100,000 in the previous tax year, and you must not be a sole director company with no other employees. The allowance is claimed through payroll software. **Worked Example -- small business with 3 employees** Total employer NIC bill: £12,000. After Employment Allowance of £10,500, the employer pays just £1,500. **Class 1A and 1B** In addition to Class 1 NICs on wages, employers also pay: - **Class 1A** at 15% on most taxable benefits in kind (reported on P11D(b) by 6 July) - **Class 1B** at 15% on items included in a PAYE Settlement Agreement (PSA) **Impact on hiring costs** For a new employee on a £30,000 salary, the employer's total cost is approximately £33,750 before benefits -- the extra £3,750 being employer NICs (£30,000 - £5,000 = £25,000 x 15%). Use a salary calculator to model your true cost of employment.

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More answers

• What is the secondary threshold for employer National Insurance in 2026/27?
• What is Class 1A National Insurance and who pays it?