1. What is the Employer Cost Calculation?

The total cost to employer includes gross salary plus employer National Insurance contributions and mandatory pension contributions. This calculation helps businesses understand the true cost of employment in the UK for the 2025-26 tax year.

2. How Does the Calculator Work?

The calculator uses the following equation:

Where:

• \( \text{Gross Pay} \) — Annual salary before deductions
• \( \text{Employer NI} \) — 13.8% on earnings above £9,568 (2025-26 secondary threshold)
• \( \text{Employer Pension} \) — Minimum 3% of qualifying earnings (auto-enrolment)

3. Importance of Employer Cost Calculation

Details: Understanding total employment costs is crucial for business budgeting, financial planning, and determining employee compensation packages.

4. Using the Calculator

Tips: Enter the employee's gross annual salary in GBP. The calculator will automatically compute employer NI and pension contributions based on 2025-26 UK rates.

5. Frequently Asked Questions (FAQ)

Q1: Are these rates accurate for all of UK?
A: Yes, these are standard UK-wide rates for the 2025-26 tax year, though pension contributions may vary by scheme.

Q2: What about employees under 21 or apprentices?
A: Different NI rates may apply for younger employees or apprentices - this calculator uses standard employer rates.

Q3: Does this include other employment costs?
A: No, this only includes mandatory costs. Additional benefits, bonuses, or insurance would be extra.

Q4: How often do these rates change?
A: NI thresholds and rates typically change annually with the UK government budget.

Q5: Is pension calculated on full salary?
A: By default we calculate on full salary, but some schemes only apply to qualifying earnings between £6,240 and £50,270.