Budget 2026 • Free calculator • Nothing stored

Cost of employing someone: 2026/27 against 2027/28

Thinking of taking on your first employee? The Budget confirmed the National Living Wage of £13.21 from April 2027. Enter the hours and see the real yearly cost: pay, employer National Insurance, the Employment Allowance and the 3% pension.

Both tax yearsThe 2026/27 and announced 2027/28 minimum wages, side by side.
Employment AllowanceUp to £10,500 a year off your employer NI, shown as its own line.
No guesswork on benefitsWe leave out benefits in kind and say what else isn’t included.
Example figures — replace with your own. Example figures are filled in so you can see how it works — replace them with your own before relying on the result shown.

1. Who you’re taking on

The minimum wage depends on their age and whether they’re an apprentice.

Enter 0 or more.
Include paid holiday.Enter 0 or more.

2. Pay and extras

The minimum wage is used unless you choose a rate.

Only used if you chose your own rate. Same rate used in both years.
Enter 0 or more.

Show the maths

How we got your figure

We work out pay first, then the employer NI week by week, then the pension, then add them up.

The step-by-step working will appear here.

Guide

What employing someone costs on top of their pay

The pay on the contract is only part of the cost. As an employer you also pay employer National Insurance of 15% on pay above £96 a week (about £5,000 a year), and at least 3% into their workplace pension if they qualify for automatic enrolment.

Most small employers can claim the Employment Allowance, which takes up to £10,500 a year off the employer NI bill. For a part-time or minimum-wage worker it often covers the whole of it, so the true cost is close to pay plus pension.

The National Living Wage for those aged 21 and over is £12.71 an hour since April 2026 and is announced to be £13.21 from April 2027. For 18 to 20 year olds the rate goes from £10.85 to £11.27, and for under-18s and apprentices from £8.00 to £8.31. Under 21s and apprentices under 25 have no employer NI on pay up to £967 a week. Our guide what a first employee costs in 2027/28 has worked examples.

Things people forget

Employer NI starts at £96 a weekIt’s charged at 15% above that, not on every pound. The Employment Allowance then takes off up to £10,500.
Not everyone can claim the allowanceA company with one director who is the only paid employee can’t claim it, and household staff you employ personally, such as a nanny, don’t count.
Pension is a legal dutyWorkers aged 22 to State Pension age earning over £10,000 must be enrolled, and you pay at least 3%.
Holiday and sick payHoliday is paid time, so include it in the weeks. Statutory sick pay is extra and isn’t in this calculator.
Running costsInsurance (employers’ liability is a legal must), payroll software, tools and training all add to the cost.
Pay slips and PAYEYou must register as an employer and run payroll before you pay someone.

Frequently asked questions

What is the National Living Wage from April 2027?

The Budget documents announced £13.21 an hour for workers aged 21 and over from 1 April 2027, up from £12.71. The rate for 18 to 20 year olds goes to £11.27, and the rate for under-18s and apprentices goes to £8.31.

How much employer National Insurance will I pay?

Employer Class 1 NI is 15% on each employee’s pay above £96 a week. For under-21s and apprentices under 25 the threshold is £967 a week. These rates are announced to stay the same in 2027/28.

What is the Employment Allowance?

It reduces your employer Class 1 NI bill by up to £10,500 a year, and it’s announced to stay at £10,500. A company with a single director who is the only employee paid above the secondary threshold can’t claim.

Do I have to pay into a pension for my employee?

If they are aged 22 to State Pension age and earn over £10,000 a year you must enrol them and pay at least 3% of their pay between £6,240 and £50,270. Those limits are the 2026/27 ones, and 2027/28 limits haven’t been published.

Does the cost include holiday pay?

Yes, if you count paid holiday weeks in the weeks paid. Most workers get 5.6 weeks of paid holiday a year, which is part of the 52 weeks, not on top of them.

What other costs are there when employing someone?

You will usually need employers’ liability insurance, payroll software or a payroll provider, and perhaps training and equipment. The calculator doesn’t include these. Benefits in kind aren’t included either.

Why are the 2027/28 figures labelled announced?

The wage rates were announced in the Budget documents and the NI changes need legislation. They can change before they take effect.

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Sources and review

Last checked: 28 October 2026. Every figure on this page was checked against GOV.UK and the Budget 2026 documents on that date by the HandySums team. Figures marked “announced” were announced on 28 October 2026 and are subject to legislation, so they can still change. We’ll update this page when the Finance Bill is published and whenever GOV.UK changes. HandySums is independent and not an accountancy firm — see how we check our sums.

Estimate only — not tax advice. This calculator estimates the yearly cost of one employee: pay at the minimum wage or your chosen rate, employer Class 1 National Insurance with or without the Employment Allowance, and the 3% employer pension. It does not include employers’ liability insurance, sick pay, recruitment, training, equipment, payroll costs, benefits in kind or an employee’s own tax and NI. The 2027/28 figures are announced and subject to legislation, and the pension limits are the 2026/27 ones. Your actual bill depends on your full Self Assessment. Verify with HMRC or a qualified accountant. The figures you enter stay in your browser and are not stored.