Your First Hire
Employee Cost Calculator UK 2026/27
Models cash employment cost using centrally managed UK tax-year variables: employer NI, pension, equipment, cash break-even revenue, a reserve range and a separate ramp-up productivity gap.
Takes about 3 minutes. Your answers stay in your browser, and no email address is required to see your result.
Statutory rates used — UK tax year 2026/27
Last checked 26 August 2026. Calculations round displayed amounts to the nearest pound; underlying calculations retain pence.
| Employer NI rate | 15.0% |
|---|---|
| Secondary Threshold (annual) | £5,000 |
| Minimum employer pension rate | 3% |
Sources: GOV.UK — rates and thresholds for employers · The Pensions Regulator — automatic enrolment · GOV.UK — Employment Allowance
What will this person really cost in year one?
£35,063 cash employment cost in year one
UK tax year 2026/27 · Statutory costs and planning assumptions shown separately
Statutory costs
| Gross salary | £30,000 |
|---|---|
| Employer NI (gross, before allowance)15.0% above £5,000 | £3,750 |
| Employer NI (net) | £3,750 |
| Employer pensionMinimum employer contribution on qualifying earnings. | £713 |
Planning assumptions
| Employers' liability insurance | £200 |
|---|---|
| Other role costs (annual) | £0 |
| Ramp-up opportunity gap (not a cash cost)Productivity assumption: 30% / 60% / 85% across months 1–3. | £3,125 |
One-off choices
| Equipment and software | £400 |
|---|---|
| Recruitment | £0 |
| Training | £0 |
| Total one-off choices | £400 |
Planning totals
| Cash employment cost in year one | £35,063 |
|---|---|
| Planning scenario including ramp-up opportunity gap (optional)The opportunity gap is a planning measure, not an additional cash payment. | £38,188 |
| Cash break-even revenue | £58,438 |
| Cash reserve range (3–6 months recurring cash cost)Excludes one-off set-up choices and the non-cash ramp-up opportunity gap. | £8,666–£17,331 |
| Enhanced break-even revenue (optional planning view)Includes the non-cash ramp-up opportunity gap. | £63,646 |
This tool organises your own inputs against published rates and clearly stated assumptions. It does not know your business, and it never tells you what to do.
Assumptions and limitations
- Statutory rates: UK tax year 2026/27, last checked 26 August 2026.
- Employer NI and pension are calculated from the shared tax-year model. Employment Allowance is not assumed unless selected.
- Insurance, equipment, recruitment, training, other role costs and ramp-up productivity are editable planning assumptions. The displayed reserve range uses recurring cash cost only.
- Displayed values are rounded to the nearest pound; calculations retain pence.
- Tax figures are based on published GOV.UK and HMRC rates for the stated tax year. Rates change. Confirm current values before relying on any calculation.
- This tool organises your own inputs against published rates and clearly stated assumptions. It does not know your business, and it never tells you what to do.
Worked examples generated from the same formula
These examples use the current planning assumptions above and show employer NI before any Employment Allowance. Change the assumptions to see the live result; the examples remain generated from the same shared calculation rather than hand-coded totals.
| Cost component | £30,000 salary | £40,000 salary |
|---|---|---|
| Employer NI (gross) | £3,750 | £5,250 |
| Employer pension | £713 | £1,013 |
| Cash employment cost | £35,063 | £46,863 |
| Ramp-up opportunity gap (not a cash cost) | £3,125 | £4,167 |
| Cash break-even revenue | £58,438 | £78,105 |
Methodology and calculation
This tool is designed with transparency in mind. The results are calculated based on the following logic:
- Employer National Insurance is charged at the published rate on pay above the full annual secondary threshold. Statutory thresholds are not reduced by contracted hours.
- Employment Allowance is modelled as a remaining employer-level annual offset. The user specifies how much allowance remains available this tax year.
- Pension cost uses the employer minimum contribution rate applied to qualifying earnings between the full annual lower and upper limits. Statutory bands are not reduced by contracted hours.
- Equipment and software are modelled as a low-to-high range (Kayley's planning assumption) in the first year only.
- Ramp-up cost is the value of output not yet delivered during the first three months, using Kayley's planning assumptions of 30%, 60% and 85% productivity.
- Cash employment cost = salary, employer NI, pension where selected, insurance, equipment and other cash costs paid by the business in year one.
- Cash break-even revenue = cash employment cost ÷ gross margin % (the additional sales required to fund the cash cost).
- The ramp-up productivity gap is shown separately as the illustrative value of output not yet delivered; it is not an additional cash payment.
- The reserve range is Kayley's planning assumption: three to six months of cash monthly running cost.
- All statutory rates come from a central, versioned tax-year record verified by James Whitfield FCCA. Nothing is hard-coded in the calculator.
Limitations and scope
- It does not tell you whether to hire, and it is not tax or payroll advice.
- It excludes recruitment fees, apprenticeship levy, salary sacrifice arrangements, redundancy provision and benefits in kind.
- Statutory rates verified by James Whitfield FCCA against GOV.UK and The Pensions Regulator for the stated tax year. Rates change — confirm current values before relying on any calculation.