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Introduction to Employer National Insurance
Employer National Insurance can make a new hire cost considerably more than the salary on the offer letter. If you run a UK business, that difference affects staffing, pricing and the money left to invest. Recent changes have made the gap more noticeable, especially for firms with several employees on modest wages.
Here is how the charge works in the 2026 to 2027 tax year, why bills rose and what to check before changing your hiring plans.
What is Employer National Insurance?
Employer National Insurance is a contribution businesses pay on employees’ earnings above the relevant threshold. Its main form is secondary Class 1 National Insurance. It is separate from the National Insurance deducted from an employee’s pay: the business pays its contribution on top of gross wages.
The amount generally depends on each employee’s earnings in a pay period and their National Insurance category. Employers may also owe Class 1A contributions on taxable benefits and Class 1B contributions under certain PAYE settlement agreements. Those charges have different rules from the ordinary salary calculation.
Employer National Insurance should therefore be included when you budget for a role. Salary alone will understate the cost of employing someone, even before pension contributions, holiday cover, equipment and training.
Why did Employer National Insurance bills rise?
From April 2025, the standard employer rate rose from 13.8% to 15%. At the same time, the annual secondary threshold fell from £9,100 to £5,000. The lower threshold means more of an employee’s pay can attract contributions, while the higher rate increases the charge on that pay.
The Office for Budget Responsibility forecast that firms would absorb some of the rise and pass some on through wages and prices.
Those changes explain why the bill can rise even if headcount stays the same. Pay increases also lift the taxable amount. The effect on any business depends on its payroll and on whether it can claim Employment Allowance or an applicable relief. Firms planning additional sales headcount should also test whether their pipeline generation strategy is creating enough suitable opportunities to justify the extra employment cost.
What are the rates and thresholds in 2026 to 2027?
For most employees, the 2026 to 2027 standard employer rate is 15% on earnings above the secondary threshold. HMRC lists that threshold as £96 a week or £417 a month, with an annual equivalent of £5,000. Payroll calculations use the relevant pay-period threshold, so the annual figure is a guide rather than a substitute for processing each payroll.
For a simple annual illustration, a worker earning £30,000 throughout the year could generate about £3,750 of employer contributions before any allowance: 15% of the £25,000 above £5,000. The actual payroll result can differ with pay frequency, earnings patterns, category and reliefs.
Employer National Insurance does not use the same starting threshold as the employee contribution. HMRC lists the employee primary threshold at £12,570 a year for 2026 to 2027. Confusing the two can leave a business with an unexpectedly low hiring budget.
Check HMRC’s 2026 to 2027 employer rates and thresholds when preparing a current forecast.
Does Employment Allowance offset the higher bill?
Eligible employers can use Employment Allowance to reduce their annual secondary Class 1 liability by up to £10,500 in 2026 to 2027. The allowance increased from £5,000 in April 2025. The previous restriction excluding employers whose prior-year Class 1 liability exceeded £100,000 was removed for claims from April 2025.
That does not mean every employer receives £10,500 in cash. The allowance offsets qualifying contributions only, up to the actual liability. A company whose sole director is its only employee liable for secondary Class 1 contributions generally cannot claim. Connected companies have additional restrictions.
Employer National Insurance costs can therefore look very different for two firms with the same number of staff. Where revenue is concentrated among a small number of customers, key account planning can help leaders understand which relationships justify greater commercial focus. Check HMRC’s eligibility rules and have your payroll provider confirm the claim before using the allowance in a forecast.
How can the extra cost affect hiring and wages?
When a role becomes more expensive, managers may delay recruitment, reduce planned hours or ask whether existing processes can handle demand. Some firms may limit future pay increases or adjust prices. Those are possible responses, not automatic outcomes for every employer.
Before freezing a vacancy, calculate what the role is expected to contribute. Include employer contributions, pension costs, management time and the likely time before the person becomes productive. Then compare that total with the value of work that cannot currently be delivered.
For a sales hire, better conversion can matter more than simply increasing the number of calls. Corporate sales training for teams can help existing staff qualify demand and explain value clearly. It should support a staffing decision, not serve as a blanket replacement for needed capacity.
The contribution raises the cost of an additional employee; it does not tell you whether that hire will be profitable. A sound decision needs both sides of the calculation. Reviewing where deals are falling out of the sales process can show whether the immediate problem is insufficient capacity or weak conversion between stages.
Can firms protect margins without cutting staff?
Start by identifying where valuable employee time goes. Repeated admin, poorly qualified enquiries, avoidable rework and unclear handovers all make a higher payroll cost harder to absorb. Fixing a measured problem is more useful than asking everyone to do more with less. Better opportunity qualification can reduce expensive sales time spent pursuing deals with little realistic chance of progressing.
Check pricing as well. If delivery costs have risen, a quote based on an old labour rate may quietly erode margin. Train salespeople to explain the value and scope of the service instead of relying on quick discounts. Corporate sales skills training and B2B corporate sales training can support that work when the commercial issue is a weak customer conversation.
The contribution is one cost among several. Review gross margin by service or customer before changing prices across the board. A costly, complex account may need a different response from a profitable one. Workforce planning should also consider how AI and jobs may change as automation alters tasks, skills and future recruitment requirements.
What should employers do next?
Ask your payroll team for a forecast using your actual pay periods, employee categories and planned pay changes. Confirm whether Employment Allowance has been claimed and whether any employees qualify for different employer contribution thresholds. Keep a separate view of other employment costs.
Then work through your hiring plan role by role. If the commercial team has unused capacity because opportunities stall, Corporate sales training programmes or Professional sales training for companies may help turn existing effort into results. If delivery is already stretched, the answer may still be to hire. Corporate sales training for businesses can also improve how new hires are prepared for customer conversations.
The charge is easier to manage when you know the real cost of each role and the value it is expected to create. Use those figures to decide where to recruit, improve processes or adjust prices. Forecasts should also allow for external pressures such as supply chain disruption, which can change workload, margins and staffing needs unexpectedly.
Frequently asked questions about Employer National Insurance
What is Employer National Insurance in the UK?
Employer National Insurance is a payroll contribution paid by UK employers in addition to an employee’s gross wages. The main charge is secondary Class 1 National Insurance on earnings above the applicable employer threshold. It is separate from National Insurance deducted from employee pay, so it should be included when calculating the full cost of employing staff.
What is the Employer National Insurance rate in 2026 to 2027?
For 2026 to 2027, the standard secondary Class 1 Employer National Insurance rate is 15% on earnings above the applicable threshold. Different thresholds or treatment can apply to qualifying apprentices and certain younger employees, so employers should use current HMRC rates and the correct National Insurance category.
At what salary does an employer start paying National Insurance?
For most employees in 2026 to 2027, employers start paying secondary Class 1 National Insurance on earnings above £96 a week or £417 a month, with an annual equivalent of £5,000. Payroll uses the threshold for the relevant pay period, and different thresholds can apply to certain employee categories.
Why did employer contributions increase in April 2025?
Employer National Insurance increased from April 2025 because the standard employer rate rose from 13.8% to 15% and the annual secondary threshold fell from £9,100 to £5,000. The lower threshold means more earnings can attract Employer National Insurance, while the higher rate increases the contribution charged on those earnings.
Is Employer National Insurance taken out of an employee’s wages?
No. Employer National Insurance is paid by the employer on top of gross salary and is not deducted from an employee’s wages. Employee National Insurance is a separate payroll deduction with its own rates and thresholds, making the employer contribution an additional employment cost.
How much Employer National Insurance is due on a £30,000 salary?
Using standard annual figures for a typical employee in 2026 to 2027, a £30,000 salary gives a simple Employer National Insurance estimate of £3,750 before Employment Allowance or relevant relief. That is £30,000 minus the £5,000 annual threshold equivalent, multiplied by 15%. Actual payroll liability can vary with pay frequency, earnings patterns and National Insurance category.
Can a small business claim Employment Allowance?
Many eligible small businesses can use Employment Allowance to reduce their secondary Class 1 Employer National Insurance liability by up to £10,500 in 2026 to 2027. It reduces qualifying contributions rather than providing an automatic cash payment. Eligibility rules apply, including restrictions for certain companies where the sole director is the only employee liable for secondary Class 1 contributions.
Does Employment Allowance cover all National Insurance charges?
No. Employment Allowance reduces eligible secondary Class 1 Employer National Insurance contributions up to the annual allowance limit. It does not automatically cover every type of National Insurance liability, so employers should confirm which payroll charges qualify before including the allowance in forecasts.
Do employers pay National Insurance for apprentices?
Qualifying apprentices under 25 can attract a 0% Employer National Insurance rate on earnings up to the apprentice upper secondary threshold of £50,270 a year in 2026 to 2027. The standard employer rate can apply above that threshold, subject to payroll rules and the correct National Insurance category.
How can employers plan for higher National Insurance costs?
Employers can plan for higher National Insurance costs by forecasting each role using current HMRC rates and thresholds, then adding pensions, benefits, recruitment, equipment and training costs. Confirm Employment Allowance or other reliefs, model planned pay rises and compare each role’s expected commercial value with its full employment cost before making broad staffing decisions.
Our B2B sales training helps businesses build more confident, consistent, and effective sales teams. We deliver corporate sales programmes, team sales training, and practical corporate sales coaching designed around the challenges your organisation faces.Our approach helps businesses communicate value more clearly, reduce buyer confusion, and improve conversion rates. We work with companies across the UK looking to strengthen sales performance through better conversations.
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