Employer National Insurance in 2026: Rates, Thresholds, Employment Allowance and Worked Examples

Employer National Insurance is the payroll tax you pay on top of your staff's wages, and since April 2025 it's a bigger cost for most UK employers. This guide explains how it works in the 2026-27 tax year: the rate and the threshold, how to claim the Employment Allowance, the category letters that cut the bill for under-21s, apprentices, veterans and Freeport staff, Class 1A on benefits, when you pay, what changes in 2029, and worked examples showing the cost in pounds.

Quick answer

Employers pay 15% secondary Class 1 National Insurance on each employee's earnings above £5,000 a year (£96 a week, £417 a month), with no upper limit. Most employers can knock up to £10,500 a year off the bill with the Employment Allowance. Employees under 21 and apprentices under 25 attract 0% up to £50,270.

• Rate rose from 13.8% and threshold fell from £9,100 on 6 April 2025

• Budget 2025 froze the £5,000 threshold until April 2031

• A £30,000 salary costs £3,750 a year in employer NI

• Single-director companies with no other employees can't claim the Employment Allowance

• From April 2029 salary sacrifice pension savings are capped at £2,000 a year a year per employee

What employer National Insurance is

National Insurance on wages has two sides. Primary Class 1 is the employee's contribution, deducted from their pay: 8% on earnings between the primary threshold (£12,570) and the upper earnings limit (£50,270), and 2% above it. Secondary Class 1 is the employer's contribution, which you pay on top of the employee's gross pay and which never appears as a deduction on their payslip.

You also pay employer contributions in two other forms. Class 1A is due on most taxable benefits in kind, such as a company car or private medical insurance, and on termination payments over £30,000. Class 1B applies to amounts covered by a PAYE Settlement Agreement. Both are charged at 15% in 2026-27.

Employer National Insurance applies to directors as well as employees. If you run a limited company and pay yourself a salary, the company pays secondary contributions on it like any other employee. Sole traders and partners don't pay Class 1 on their own profits; they pay Class 4 through Self Assessment instead, covered in our self-employed tax guide.

Rates and thresholds for 2026-27

HMRC's figures for the tax year from 6 April 2026 to 5 April 2027 are below. Payroll software applies the threshold for the pay period you use, so a weekly-paid employee crosses the threshold at £96 a week and a monthly-paid one at £417 a month.

Source: HMRC, rates and thresholds for employers 2026 to 2027.

Two features catch employers out. First, the employer threshold is far below the employee's: you start paying at £5,000, while the employee doesn't pay anything until £12,570. So you pay National Insurance on many part-time and low-paid staff who pay none themselves. Second, there's no upper limit for employers: the employee's rate drops to 2% above £50,270, but yours stays at 15% on every pound above the threshold.

Earnings between the lower earnings limit (£6,708) and the primary threshold still count towards the employee's State Pension record, even though the employee pays nothing on them.

What changed in April 2025, and what's frozen

The 2024 Autumn Budget made the largest change to employer National Insurance in years, effective from 6 April 2025:

• the employer rate rose from 13.8% to 15%;
• the secondary threshold fell from £9,100 to £5,000 a year;
• the Employment Allowance more than doubled, from £5,000 to £10,500, and the rule that stopped employers with an employer NI bill of £100,000 or more from claiming was removed;
• Class 1A and Class 1B rates also rose to 15%.

The 2025 Budget then locked the threshold in place. According to the Budget 2025 overview of tax legislation, the secondary threshold will stay at £5,000 until April 2031, and the upper earnings limit and the upper secondary thresholds aligned with it stay at £50,270 over the same period. As wages rise, a frozen threshold means more of each pay packet is charged at 15%.

Employer NI at a glance (2026-27)

15%

Employer rate

Was 13.8% before April 2025

£5,000

Secondary threshold a year

Frozen to April 2031

£10,500

Employment Allowance

Per employer per tax year

£50,270

0% up to, for under-21s and apprentices under 25

Worked examples in pounds

The basic sum is the same for everyone on category A: take annual earnings, subtract £5,000, and multiply by 15%. Payroll software does this per pay period, so monthly figures can differ by a few pence from the annual calculation.

Monthly payroll. An employee paid £2,500 a month has £2,083 above the monthly threshold of £417 a month, so the employer pays £312.45 that month.

Part-timers. The £9,000 row is the one many small employers didn't expect. A part-timer on £9,000 a year pays no National Insurance themselves, but since April 2025 their employer pays £600 a year. Hospitality, retail and care businesses with lots of part-time staff felt the change most.

What a small team really pays

Five staff on £25,000. Gross employer NI is 5 × £3,000, which is £15,000. Take off the £10,500 Employment Allowance and the bill is £4,500 for the year. Under the 2024-25 rules, the same team cost £10,971 before a £5,000 allowance, a net £5,971. The bigger allowance means this business pays about £1,471 less than before.

Twelve staff on £30,000. Gross employer NI is £45,000; after the allowance, £34,500. In 2024-25 it was £34,610.40 less £5,000, or £29,610.40. This employer pays about £4,890 more a year.

The rule of thumb: very small employers often came out level or better because of the higher allowance, while employers with roughly ten or more staff on average wages pay more. Run your own payroll through the same sum before budgeting for 2026-27 and 2027-28.

The Employment Allowance

The Employment Allowance reduces your employer Class 1 National Insurance bill by up to £10,500 each tax year. It's applied payroll by payroll: you pay no employer NI until you've used the allowance, then pay as normal for the rest of the year. If your total bill is less than £10,500, you simply pay nothing, but you can't get the difference as a refund.

Who can claim. Businesses and charities (including community amateur sports clubs), and individuals employing a care or support worker. Since April 2025 there's no limit on the size of your employer NI bill.

Who can't. Public bodies and businesses doing more than half their work in the public sector, unless they're charities. Companies where the only employee paid above the secondary threshold is a sole director. Employers of domestic staff such as nannies and gardeners, unless they're care or support workers. Earnings within the off-payroll working (IR35) rules don't count towards a claim.

Groups and multiple payrolls. Only one company in a group of connected companies or charities can claim, and you can claim against only one PAYE scheme.

Claiming the Employment Allowance

1. 1

   Check you're eligible

   A business or charity, not mainly public-sector work, and not a company whose only employee above the threshold is a sole director.

2. 2

   Set the indicator on your EPS

   In payroll software, answer 'Yes' to the Employment Allowance indicator on your next Employment Payment Summary.

3. 3

   Use it against each payroll

   Employer NI is offset each pay run until the allowance is used up or the tax year ends.

4. 4

   Claim again next April

   The claim doesn't roll over — make it every tax year.

   Employment Allowance on GOV.UK

How to claim. You must claim every tax year. In your payroll software, set the Employment Allowance indicator to "Yes" on your next Employment Payment Summary (EPS) to HMRC; if your software doesn't support it, use HMRC's Basic PAYE Tools. HMRC doesn't send a confirmation, but you'll get an automated message within five working days if the claim is rejected. You can also claim for up to four previous tax years if you were eligible and didn't claim.

State aid. For some businesses the allowance counts as de minimis subsidy. If you're claiming for a past year, select your business sector when you claim; most businesses choose "Industrial/other".

Category letters and reliefs that cut the bill

Every employee has a National Insurance category letter in your payroll software. Most adults are category A. The letter determines the rates you and they pay, and choosing the right one is the employer's responsibility.

Under 21 (category M). You pay 0% employer NI on earnings up to £50,270, and 15% only above that. On a 19-year-old earning £18,000, that saves £1,950 a year compared with category A.

Apprentices under 25 (category H). Same treatment: 0% up to £50,270. The apprentice must be on an approved apprenticeship standard or framework. Keep evidence of the apprenticeship agreement.

Veterans (category V). For the first 12 months of a qualifying veteran's first civilian job since leaving the regular armed forces, you pay 0% up to £50,270. Anyone who served at least one day in the regular forces, including basic training, can qualify. Budget 2025 extended this relief until 5 April 2028.

Freeport and Investment Zone staff (categories F, I, L, S and D, E, K, N). If you have premises in a designated special tax site, you can pay 0% up to £25,000 on new employees who spend at least 60% of their working time there, for their first 36 months. They must have started between 6 April 2022 and 30 September 2031 for English Freeports, or 30 September 2034 for Scottish Green Freeports, Welsh Freeports and Investment Zones.

Over State Pension age (category C). The employee pays no National Insurance, but you still pay 15% above the secondary threshold. Many employers assume older staff are NI-free for both sides; they aren't.

Married women's reduced rate (B) and deferment (J, L, Z, D). These are uncommon and affect only the employee's rate; the employer rate is unchanged.

Employer rate by category (2026-27)

Category	Who	Employer pays
A	Most employees	15% above £5,000
M / Z	Under 21	0% up to £50,270, then 15%
H	Apprentice under 25	0% up to £50,270, then 15%
V	Veteran, first 12 months of civilian work	0% up to £50,270, then 15%
F / I / L / S	New Freeport employee	0% up to £25,000, then 15%
N / E / D / K	New Investment Zone employee	0% up to £25,000, then 15%
C	Over State Pension age	15% above £5,000

A

Who

Most employees

Employer pays

15% above £5,000

M / Z

Who

Under 21

Employer pays

0% up to £50,270, then 15%

H

Who

Apprentice under 25

Employer pays

0% up to £50,270, then 15%

V

Who

Veteran, first 12 months of civilian work

Employer pays

0% up to £50,270, then 15%

F / I / L / S

Who

New Freeport employee

Employer pays

0% up to £25,000, then 15%

N / E / D / K

Who

New Investment Zone employee

Employer pays

0% up to £25,000, then 15%

C

Who

Over State Pension age

Employer pays

15% above £5,000

Worked example: a hair salon. A salon employs two stylists on £24,000, a 20-year-old junior on £16,000 and a 17-year-old apprentice on £12,000. The stylists cost £2,850 each in employer NI. The junior is category M and the apprentice category H, so both cost nothing. Gross employer NI is £5,700, which the £10,500 allowance wipes out completely. Had the junior and apprentice been on category A by mistake, the payroll would have shown another £2,700 of liability — not a cash cost here because the allowance covers it, but it would have used up allowance a growing business may need later.

Directors and limited company owners

Directors have an annual earnings period, so their National Insurance is worked out on their total pay for the year (or the part of the year they're a director), not pay period by pay period. Payroll software handles this if you mark the employee as a director, and there's an alternative method that spreads contributions evenly through the year with a final adjustment.

For an owner-managed company, the salary level matters. A director's salary up to £5,000 attracts no employer NI. A salary of £12,570 costs the company £1,135.50 in employer NI if it can't claim the Employment Allowance, but it's deductible for Corporation Tax and uses the director's personal allowance. A salary above the lower earnings limit of £6,708 also earns a qualifying year towards the director's State Pension without the director paying National Insurance. Dividends don't attract National Insurance at all, which is why many owners mix salary and dividends; see our dividend tax guide and sole trader vs limited company comparison before you decide.

Reporting and paying HMRC

Employer National Insurance is part of your PAYE bill. Your software calculates it each pay run and reports it on the Full Payment Submission (FPS) you send on or before payday. You then pay HMRC by the 22nd of the next tax month if you pay electronically (the 19th by post). Small employers whose average monthly PAYE bill is under £1,500 can pay quarterly instead.

Employment Allowance claims, and any adjustments, go on the Employment Payment Summary. Class 1A on benefits in kind is reported on form P11D(b) by 6 July after the tax year and paid by 22 July if paid electronically, unless you payroll the benefits. If you're just starting to employ people, register as an employer before the first payday.

Employer NI reporting and payment dates

Each payday

Full Payment Submission (FPS) includes employer NI

22nd of next tax month

Pay PAYE and NI electronically (19th by post)

Quarterly

Option if your average monthly PAYE bill is under £1,500

6 July

P11D(b) for Class 1A on benefits in kind

22 July

Pay Class 1A electronically

Salary sacrifice and the 2029 cap

Salary sacrifice lets an employee give up part of their salary in exchange for an employer pension contribution. Because employer pension contributions are free of National Insurance, both sides save: you save 15% on the sacrificed amount, and the employee saves their own rate.

From 6 April 2029, HMRC says only the first £2,000 a year a year of pension contributions made through salary sacrifice will be free of National Insurance for each employee. Anything above that will attract employer and employee NI, like ordinary employee pension contributions. Employer contributions made without salary sacrifice stay NI-free, and the Income Tax treatment doesn't change. Example: an employee who sacrifices £5,000 a year in 2029-30 would bring £3,000 back into charge, costing the employer £450 a year at today's 15% rate. HMRC will publish detailed guidance before April 2029, and your workplace pension duties are unaffected.

Common mistakes

Forgetting to claim the Employment Allowance each year. It isn't automatic. If you didn't claim, you can go back four tax years.

Wrong category letters. Leaving under-21s and apprentices on category A overpays employer NI; putting over-State-Pension-age staff on category C and assuming you pay nothing underpays it. Check letters when someone joins, turns 21, finishes an apprenticeship or reaches State Pension age.

Claiming the allowance as a sole-director company. HMRC can claw it back with interest if the only employee above the threshold is the director.

Ignoring benefits in kind. Class 1A is easy to forget because it's paid annually, but a company car or health insurance attracts 15%.

Official links

• Rates and thresholds for employers 2026 to 2027All Class 1 rates by category letter
• Employment AllowanceEligibility and how to claim
• Veterans NICs reliefQualifying conditions
• Freeport and Investment Zone NICs reliefSpecial tax site rules
• Salary sacrifice from April 2029The £2,000 cap

What to do next

Check every employee's category letter in your payroll software, confirm your Employment Allowance claim for 2026-27 is switched on, and cost new hires with employer NI, auto-enrolment pension contributions and the National Minimum Wage together. The salary slip generator helps you check that payslips show the right deductions.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

What is the employer National Insurance rate for 2026-27?

Employers pay 15% secondary Class 1 National Insurance on each employee's earnings above the secondary threshold of £5,000 a year (£96 a week or £417 a month). The rate rose from 13.8% and the threshold fell from £9,100 on 6 April 2025. There's no upper limit: the 15% applies to all earnings above the threshold.

How much employer NI do I pay on a £30,000 salary?

£3,750 a year. Earnings above the £5,000 threshold are £25,000, and 15% of that is £3,750, or £312.50 a month. Before April 2025 the same salary cost £2,884.20. If you can claim the Employment Allowance, it reduces your total employer NI bill by up to £10,500 a year.

Who can claim the Employment Allowance?

Most businesses and charities that pay employer Class 1 National Insurance can claim up to £10,500 a year, with no cap on the size of your NI bill since April 2025. You can't claim if your company's only paid employee is a sole director, if you're a public body or do more than half your work in the public sector, or for domestic staff other than care and support workers.

Do employers pay National Insurance on under-21s and apprentices?

Not on most of their pay. For employees under 21 (category M) and apprentices under 25 (category H), the employer rate is 0% up to the upper secondary threshold of £50,270 a year. You pay 15% only on earnings above that. The employee still pays their own National Insurance as normal.

When is employer National Insurance paid?

With your PAYE bill. Payroll software calculates it every pay run, you report it on your Full Payment Submission, and you pay HMRC by the 22nd of the next tax month if paying electronically, or quarterly if your monthly bill averages under £1,500. Class 1A on benefits in kind is paid once a year, by 22 July if paid electronically.

Will salary sacrifice still save employer National Insurance?

Until April 2029, yes. From 6 April 2029, only the first £2,000 a year of pension contributions made through salary sacrifice will be free of National Insurance for each employee. Sacrificed amounts above that will attract employer and employee NI. Employer pension contributions outside salary sacrifice stay free of National Insurance.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 9 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Rates and thresholds for employers 2026 to 2027 — HMRC / GOV.UK · accessed 9 October 2026
2. 2.Employment Allowance — HMRC / GOV.UK · accessed 9 October 2026
3. 3.Changes to the Class 1 NICs secondary threshold, secondary rate and Employment Allowance — HMRC · accessed 9 October 2026
4. 4.Budget 2025: Overview of tax legislation and rates (OOTLAR) — HM Treasury / HMRC · accessed 9 October 2026
5. 5.Changes to salary sacrifice for pensions from April 2029 — HMRC · accessed 9 October 2026
6. 6.Claim National Insurance contributions relief for veterans as an employer — HMRC / GOV.UK · accessed 9 October 2026
7. 7.Check if you can claim National Insurance relief in UK Freeport or Investment Zone special tax sites — HMRC / GOV.UK · accessed 9 October 2026