Employer National Insurance is one of the biggest costs of employing staff in the UK, and at 15% on earnings above a relatively low threshold, it’s not going down any time soon. The government has confirmed that all employer NIC rates and thresholds are frozen at their current levels until at least 2030/31. If you employ people, these are the numbers you’re working with for the foreseeable future.
Current employer NIC rates for 2026/27
The employer NIC rate for 2026/27 is 15% on employee earnings above the secondary threshold. That rate took effect in April 2025 (up from 13.8%) and is unchanged for 2026/27. The secondary threshold, the point at which employer NIC kicks in, is £5,000 per year (£417 per month, £96 per week). This threshold also dropped significantly in April 2025, from £9,100 per year, and remains frozen at £5,000 for 2026/27.
The combination of the higher rate and the lower threshold means employers pay NIC on a larger portion of each employee’s earnings, and at a higher percentage. For any business that took on staff before April 2025, the cost of employment is materially higher than it was two years ago.
All the key thresholds for 2026/27
Secondary threshold (employer NIC starts): £5,000 per year / £417 per month / £96 per week
Primary threshold (employee NIC starts): £12,570 per year / £1,048 per month
Upper Earnings Limit: £50,270 per year / £4,189 per month
Lower Earnings Limit (State Pension qualifying): £6,708 per year / £129 per week. This increased slightly from £6,500 in 2025/26.
Employee NIC rate: 8% on earnings between the primary threshold and upper earnings limit, 2% above the upper earnings limit
Class 1A NIC (on benefits in kind): 15%. This matches the employer Class 1 rate and applies to all taxable benefits reported on the P11D or through payrolled benefits.
Class 1B NIC (on PAYE Settlement Agreements): 15%
The personal allowance for income tax remains at £12,570. All of these thresholds are frozen until 2030/31, meaning that as wages rise with inflation, more employees are pulled into higher tax and NIC bands each year. HMRC collects more without changing a single rate.
What employer NIC actually costs per employee
The calculation is straightforward: take the employee’s annual earnings, subtract the £5,000 secondary threshold, and multiply by 15%. But seeing the actual numbers for common salary levels is useful for budgeting.
Employee on £25,000: (£25,000 – £5,000) x 15% = £3,000 per year in employer NIC
Employee on £30,000: (£30,000 – £5,000) x 15% = £3,750 per year
Employee on £50,000: (£50,000 – £5,000) x 15% = £6,750 per year
Part time worker, 16 hours per week at £12.71 (NLW from April 2026): Annual earnings of approximately £10,575. Employer NIC: (£10,575 – £5,000) x 15% = £836 per year
For a business with 10 employees on £30,000, that’s £37,500 per year in employer NIC alone, before you factor in pension contributions, holiday pay accrual, and any other employment costs.
Employment Allowance: reducing your bill
Employment Allowance for 2026/27 is £10,500. It works by offsetting your employer Class 1 NIC liability each time you run payroll, so you pay nothing to HMRC until the allowance is used up. If your total annual employer NIC bill is £10,500 or less, Employment Allowance wipes it out entirely. You claim it through your payroll software by ticking the Employment Allowance indicator on your Employer Payment Summary (EPS). If you outsource your payroll, your bureau should claim this from day one of each tax year.
The previous £100,000 NIC liability cap that excluded larger employers was removed in April 2025 and hasn’t come back. If your business was previously ineligible because your NIC bill was too high, you can now claim. The main exclusions that remain are: public authorities (other than charities), single director companies where the director is the only employee paid above the secondary threshold, and connected companies (where only one company in the group can claim).
How the rates affect common payroll structures
Directors’ salary: Many owner managed companies pay a director’s salary at or near the personal allowance (£12,570) to avoid income tax while building State Pension qualifying years. Employer NIC on a £12,570 salary is £1,135.50 per year (£7,570 above the £5,000 threshold at 15%). For companies claiming Employment Allowance, this is fully offset. For single director companies that can’t claim Employment Allowance, it’s an additional cost to weigh against the State Pension benefit.
Part time and seasonal staff: The £5,000 threshold means employer NIC kicks in very quickly for part time workers. Businesses with a large number of lower paid staff (hospitality, retail, care homes, seasonal agriculture) pay employer NIC on almost every employee’s earnings, even those on only a few hours per week. The threshold applies per employee, so ten part time workers generate ten separate NIC liabilities.
Salary sacrifice: Pension salary sacrifice remains one of the most effective ways to reduce employer NIC. When an employee sacrifices salary in exchange for increased employer pension contributions, the sacrificed amount is not subject to employer NIC. A £100 per month salary sacrifice saves the employer £15 per month in NIC per employee. Over a year, across multiple staff, that adds up. Just make sure the post sacrifice pay doesn’t drop below the National Minimum Wage.
What’s different for 2026/27 compared to last year
Almost nothing on the NIC side. The rates and main thresholds are identical to 2025/26. The only NIC change for 2026/27 is a small increase to the Lower Earnings Limit, from £125 per week (£6,500 per year) to £129 per week (£6,708 per year). This affects the minimum earnings needed to qualify for a State Pension year but doesn’t change how much NIC anyone pays. The bigger payroll changes for 2026/27 sit elsewhere: mandatory payrolling of benefits in kind from April 2027 (with voluntary early adoption available now), Student Loan Plan 5 repayments starting from April 2026, SSP reforms under the Employment Rights Act 2025, the new Fair Work Agency’s enforcement powers, and unchanged auto enrolment thresholds.
If you want to make sure your payroll is correctly applying the current rates, claiming Employment Allowance, and keeping up with the other 2026/27 changes, talk to us. For payroll services across Hull and East Yorkshire, or to discuss what these numbers mean for your specific business, check our pricing or get in touch.
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