Employer National Insurance is one of the largest hidden costs of taking on staff in the UK — and since April 2025 it has become significantly more expensive. If you employ anyone, you pay it on top of their wages: it is a tax on the employer, not a deduction from the employee’s pay. This guide explains the current 15% rate, the £5,000 Secondary Threshold, and how the £10,500 Employment Allowance can wipe out the bill for many small employers. All figures are current for 2025/26, and unchanged for 2026/27.
What Is Employer National Insurance?
Employer National Insurance — formally secondary Class 1 National Insurance contributions — is the tax a UK employer pays on each employee’s earnings above a set threshold. Unlike employee National Insurance, deducted from wages through PAYE, employer NI is paid by the business on top of gross pay. It does not reduce take-home pay, but it raises the true cost of every hire.
It applies to most earnings: salary, bonuses, commission and overtime all count, as do some benefits in kind through Class 1A National Insurance, charged at the same 15% rate. There is no upper earnings limit — unlike employee NI, which drops to 2% above £50,270, employer NI is charged at 15% on everything above the threshold.
If you are new to running payroll, our guide to PAYE and Payroll Basics for UK Employers explains how PAYE and reporting to HMRC fit together.
Employer National Insurance Rates and Thresholds for 2025/26
Three things changed on 6 April 2025, and they still apply in 2026/27. The rate rose from 13.8% to 15%; the Secondary Threshold — the point at which employer NI starts — fell from £9,100 to £5,000 a year (£96 a week, or £417 a month); and the Employment Allowance rose from £5,000 to £10,500 a year.
| Tax year | Employer NI rate | Secondary Threshold | Employment Allowance |
|---|---|---|---|
| 2024/25 | 13.8% | £9,100 | £5,000 |
| 2025/26 | 15% | £5,000 | £10,500 |
| 2026/27 | 15% | £5,000 | £10,500 |
The £5,000 Secondary Threshold is fixed until 5 April 2028. For staff under 21, apprentices under 25 and qualifying veterans, employer NI only starts above the Upper Secondary Threshold of £50,270 a year.
How to Calculate Employer National Insurance
The calculation is simple: (gross pay − £5,000) × 15%.
Example: an employee earns £30,000 a year. Subtract the £5,000 Secondary Threshold to get £25,000, then apply 15% — £3,750 a year, or about £312.50 a month. The employee’s own National Insurance (8% between £12,570 and £50,270) is separate and comes out of their pay, not yours.
For a part-time employee on £12,000 a year, the bill is (£12,000 − £5,000) × 15% = £1,050 a year; a senior employee on £80,000 costs £11,250 a year. To see what the employee actually takes home, read our linked guide to gross pay and net pay in the UK.
What Is the Employment Allowance?
The Employment Allowance lets eligible employers reduce their annual employer NI bill by up to £10,500. It is not a cash payment: HMRC offsets it against the employer NI you owe each pay period until it runs out. If your total annual bill is £10,500 or less, you pay no employer NI at all that year.
The allowance can only offset your employer NI bill — not employee National Insurance, Income Tax, or Class 1A National Insurance on benefits in kind.
Who Can Claim the Employment Allowance?
Most employers can claim, including limited companies, sole traders with staff, charities and community amateur sports clubs. Since April 2025 the old £100,000 eligibility cap has been removed, so there is no longer any limit based on the size of your previous year’s National Insurance bill.
You cannot claim if the only employee is a company director paid above the Secondary Threshold — single-director companies are excluded — or if you employ someone for personal or domestic work, such as a nanny (care and support workers are an exception). Public sector bodies carrying out more than half of their work in the public sector also cannot claim, unless they are a charity.
One claim covers one PAYE scheme for the tax year, and you must claim again each year — it does not roll over automatically.
How to Claim the Employment Allowance
Claim through your payroll software, or HMRC’s free Basic PAYE Tools, by ticking the Employment Allowance box when you submit your Employer Payment Summary (EPS) to HMRC. You can claim at any point in the tax year, and the allowance applies from the start of the tax year, so a late claim still offsets employer NI already paid. You can also backdate a claim for up to four previous tax years. If your current setup makes claiming fiddly, see our linked guide to the best payroll software for UK small businesses.
Worked Example: A Small Employer with Three Staff
Example: a small business employs three people, each on £30,000 a year. Employer NI is £3,750 per person, £11,250 in total. The £10,500 Employment Allowance covers all but £750 — so the business pays just £750 of employer NI for the whole year.
For a business with two employees on £30,000, the bill is £7,500 — fully covered by the allowance, so nothing is payable at all. For company directors the picture is different, because salary and dividends are taxed differently — see our guide to pension contributions through your limited company for one way directors plan around payroll costs.
Common Mistakes to Avoid
- Forgetting to claim the Employment Allowance, or forgetting to re-claim it each tax year.
- Budgeting a new hire on gross salary alone. Add employer NI at 15% above £5,000, plus the minimum 3% employer pension contribution, to get the true cost.
- Assuming a single-director company qualifies for the allowance — it does not.
Frequently Asked Questions
What is the current Employer National Insurance rate?
It is 15% on earnings above the £5,000 Secondary Threshold in 2025/26 and 2026/27, up from 13.8% before 6 April 2025.
Do I pay employer NI on a part-time employee?
Yes, once their pay passes £5,000 a year (roughly £96 a week). A part-time employee on £12,000 a year costs £1,050 a year in employer NI.
Can a limited company with one director claim the Employment Allowance?
No, if the director is the only employee paid above the Secondary Threshold. Once the company employs a second person paid above the threshold, it can usually claim.
Does the Employment Allowance reduce my employees’ National Insurance?
No. It only offsets your employer NI bill as the employer. Your employees’ own National Insurance is unaffected.
If payroll costs are eating into your margins, we can help. Our accounting and payroll services cover payroll, National Insurance and Employment Allowance claims. Contact Financial Accounting Firm or email info@financialaccountingfirm.co.uk.
This article is general information only and is not personal tax or financial advice. Rates and thresholds are current for 2025/26 and 2026/27 but can change, so check GOV.UK or speak to a qualified adviser before making decisions.
