Employers pay secondary Class 1 NI of 15% on each employee's earnings above the £5,000 secondary threshold (2026/27). It is a cost on top of gross pay, invisible on payslips but central to what hiring actually costs: a £30,000 salary carries £3,750 of employer NI. The Employment Allowance lets most smaller employers knock £10,500 off their annual bill.
Employer NI is why salary sacrifice benefits employers too, and why umbrella-company workers should scrutinise their rate: the umbrella's employer NI comes out of the assignment rate before pay is calculated. Work out the NI on a salary with the National Insurance Calculator.
Hiring at £35,000 costs the employer an extra £4,500 in NI (15% of the £30,000 above the secondary threshold), so the true payroll cost is £39,500 before pension contributions. A small business with the £10,500 Employment Allowance can wipe out employer NI on roughly its first two or three modest salaries.
