1. What Is The UK Employee Cost Calculator?

The UK Employee Cost Calculator helps employers determine the total cost of employing staff in the United Kingdom for the 2025/26 tax year, including salary, employer National Insurance contributions, and pension contributions.

2. How Does The Calculator Work?

The calculator uses the following formula:

Where:

• \( Salary \) — Gross annual salary in GBP
• \( 13.8\% \) — Employer National Insurance rate for 2025/26
• \( Pension\% \) — Employer pension contribution percentage

Explanation: This calculation provides the true cost to employers beyond just the employee's salary, accounting for mandatory employer contributions.

3. Importance Of Employee Cost Calculation

Details: Accurate employee cost calculation is essential for business budgeting, financial planning, and understanding the true cost of employment beyond basic salary figures.

4. Using The Calculator

Tips: Enter the gross annual salary in GBP and the employer pension contribution percentage. All values must be valid (salary > 0, pension percentage between 0-100).

5. Frequently Asked Questions (FAQ)

Q1: What Is Employer National Insurance?
A: Employer NI is a tax paid by employers on their employees' earnings above the secondary threshold, currently at 13.8% for the 2025/26 tax year.

Q2: Are Pension Contributions Mandatory?
A: Under auto-enrolment rules, employers must contribute a minimum percentage to eligible employees' workplace pensions, currently 3% of qualifying earnings.

Q3: What Other Costs Should Employers Consider?
A: Additional costs may include apprenticeship levy, benefits in kind, bonuses, training costs, equipment, and office space.

Q4: Does This Include Employee Tax Deductions?
A: No, this calculator shows employer costs only. Employee deductions like income tax and employee NI are separate.

Q5: Are There Different NI Rates?
A: The 13.8% rate applies to most employees. Different rates may apply for employees under 21, apprentices under 25, or those over state pension age.