Cost of Employing Someone in 2027/28: Guide

The short version

The National Living Wage for ages 21 and over goes from £12.71 to £13.21 an hour on 1 April 2027 (announced).
Employer NI is 15% on pay above £96 a week. The Employment Allowance takes up to £10,500 a year off.
Employers must pay at least 3% into the pension of workers aged 22 and over who earn over £10,000.
A 30-hour-a-week worker on the minimum wage costs about £21,000 a year in 2027/28 once the Employment Allowance is used.
These figures are announced, not law yet, and exclude insurance, sick pay and other running costs.

What is changing for employers?

Three things set the yearly cost of an employee: pay, employer National Insurance and the workplace pension. The Budget on 28 October 2026 changed the first of these. Everything for 2027/28 here is announced and subject to legislation.

Minimum wage per hour	From April 2026	From April 2027 (announced)
21 and over (National Living Wage)	£12.71	£13.21
18 to 20	£10.85	£11.27
Under 18	£8.00	£8.31
Apprentice	£8.00	£8.31

Employer NI stays at 15%, with the threshold at £96 a week (about £5,000 a year), and the Employment Allowance stays at £10,500.

How the cost is built up

Pay. Hourly rate × hours × weeks. Include paid holiday in the weeks.
Employer NI. 15% of weekly pay above £96, less the Employment Allowance (up to £10,500 a year).
Pension. At least 3% of qualifying earnings (pay between £6,240 and £50,270) for workers aged 22 and over earning over £10,000.

Cost of Employing Someone Calculator

Enter the age, hours and weeks to see the full yearly cost in both years.

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Worked example: a 30-hour worker aged 21 or over

A 30-hour, 52-week job at the minimum wage.

	2026/27	2027/28 (announced)
Hourly rate	£12.71	£13.21
Weekly pay	£381.30	£396.30
Yearly pay	£19,827.60	£20,607.60
Employer NI before allowance	£2,225.34	£2,342.34
Employment Allowance	−£2,225.34	−£2,342.34
Pension (3%)	£407.63	£431.03
Total cost with the allowance	£20,235.23	£21,038.63
Total cost without the allowance	£22,460.57	£23,380.97

The employer NI is 15% of (£396.30 − £96) = £45.045 a week, which is £2,342.34 over 52 weeks. The pension is 3% of (£20,607.60 − £6,240) = £431.03. The Employment Allowance covers all of the NI here, so the true extra cost over pay is just the pension. The cost rises by about £803 between the two years.

Employment Allowance

The Employment Allowance reduces your employer Class 1 NI bill by up to £10,500 a year. Most small employers qualify, but a company whose only paid employee is a director can't claim, and a person employing household staff, such as a nanny, can't either. You claim it through your payroll software. A first employee on or near the minimum wage is almost always covered, so the NI cost is often nothing.

Pensions and automatic enrolment

If your employee is aged 22 to State Pension age and earns over £10,000 a year, you must enrol them in a workplace pension and pay at least 3% of their pay between £6,240 and £50,270. The employee pays 5%, so the total is 8%. Those are the 2026/27 limits. The 2027/28 limits have not been published, so the calculator uses the 2026/27 ones.

Under-21s and apprentices

Employees under 21, and apprentices under 25, have no employer NI on pay up to £967 a week, so their NI cost is usually zero. The minimum wage for the youngest and apprentices is much lower, but pension rules still depend on age and earnings. In the calculator, pension is only included for adults.

Running costs not included

You will usually need employers' liability insurance, payroll software or a provider, perhaps a pension provider fee, and equipment. Statutory sick pay and holiday cover add more. If you are a tradesperson, check how this fits with how much tax to put aside and VAT for tradespeople. See also what the Budget means for the self-employed.

Questions people ask

What is the minimum wage from April 2027?

The Budget documents announced £13.21 for ages 21 and over, £11.27 for 18 to 20, and £8.31 for under 18s and apprentices from 1 April 2027. They are £12.71, £10.85 and £8.00 now.

Do I have to pay employer National Insurance on a first employee?

Yes, at 15% on pay above £96 a week, unless the employee is under 21 or an apprentice under 25, when the threshold is £967 a week. The Employment Allowance can cover up to £10,500 of the bill.

Who can claim the Employment Allowance?

Most employers with an employer NI bill can. A company where the only paid employee is also a director can't, and nor can employers of household staff such as a nanny, except for some care and support workers.

How much pension must I pay?

If your employee is aged 22 to State Pension age and earns over £10,000, you must enrol them and pay at least 3% of their earnings between £6,240 and £50,270. The employee pays 5%. These are the 2026/27 limits, and 2027/28 limits have not been published.

What does a minimum-wage worker really cost?

At £13.21 for 30 hours a week over 52 weeks, pay is £20,607.60 a year, and with the Employment Allowance covering employer NI and a 3% pension of £431.03 the cost is £21,038.63. Without the allowance it is £23,380.97.

Are there costs the calculator leaves out?

Yes: employers' liability insurance, payroll software, recruitment, training, tools, sick pay and benefits in kind. They vary by business, so add your own.

Sources

Checked against the sources below on 28 October 2026. The 2027/28 figures are announced, not law yet, so we will update this guide when the legislation is published.