Employer National Insurance Explained

How employer Class 1 National Insurance is calculated and how it affects the total cost of employment.

Reviewed against official HMRC guidance

Tax year
2026/27
Last reviewed
August 2026
Reading time
8 min

What employer National Insurance is

Who this guide is for: For employers, finance teams and anyone comparing the full cost of a salary offer — not the employee payslip deduction.

When you employ someone in the UK, you pay Class 1 employer National Insurance on their earnings above the Secondary Threshold. This is in addition to the employee's own Class 1 NI and Income Tax. Employee NI is explained in National Insurance Explained.

From salary to total employment cost

  1. Step 1Gross salary
  2. Step 2Add employer National Insurance
  3. Step 3Add employer pension
  4. Step 4Equals total employment cost
Simplified employer cost stack. Employment Allowance and special categories can change the National Insurance line.

For 2026/27, employer Class 1 National Insurance is charged at 15% on earnings above the Secondary Threshold of £5,000.00 per year (pro-rated each pay period).

The Lower Earnings Limit (£6,708.00) marks when an employee builds National Insurance credits — it is not the employer National Insurance threshold.

Employment Allowance and special categories

Eligible employers may claim Employment Allowance of up to £10,500.00 in 2026/27 against their employer National Insurance bill. Not all employers qualify — for example sole-director companies with no other employees are typically excluded. Always check current GOV.UK eligibility.

Northline's salary calculators do not apply Employment Allowance automatically — treat example figures as before allowance.

Special National Insurance categories and reliefs (freeports, investment zones, under-21 / apprentice employer reliefs) change thresholds or rates for some employees. They are payroll-specific — confirm the category letter and relief with your payroll software or adviser.

Worked example

£35,000 salary — employer cost

Tax year 2026/27 · England · no employee pension · employer pension 3% on qualifying earnings · National Insurance category A · Employment Allowance not applied.

£35,000 salary — employer cost
Gross salary£35,000.00
Employer National Insurance£4,499.40
Employer pension contribution£862.80
Total employment cost (key figure)£40,362.20
Employee National Insurance (separate — from pay)£1,793.92

Secondary Threshold £5,000.00. Employment Allowance up to £10,500.00 may reduce employer National Insurance for eligible employers only.

Open the employer cost view in the Income Tax Calculator Use the Income Tax Calculator

Qualifying salary sacrifice can reduce employer National Insurance on the sacrificed amount.

Frequently asked questions

Do employees pay employer National Insurance?

No. Employer Class 1 NI is a separate charge on the employer. It does not appear as a deduction on the employee payslip, though it affects the total cost of employment.

What is the Employment Allowance?

Eligible employers can reduce their employer National Insurance bill by up to £10,500.00 in 2026/27. Not every employer qualifies — for example it generally cannot be claimed where the director is the only employee. Check GOV.UK eligibility rules.

Does salary sacrifice reduce employer National Insurance?

Yes, on qualifying pension sacrifice the employer usually saves Class 1 National Insurance on the sacrificed amount because that pay is no longer subject to employer National Insurance.

Official sources

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This guide is for general information only. It is not tax, legal or financial advice. Always check the official guidance for your situation.