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CALCULATORS · FREE TO USE · 2026/27 RATES
PAYE & staff cost calculator - see what each hire really costs your business
A salary on paper is never what a hire actually costs. Employer National Insurance, pension contributions and other on-costs can add 15–20% or more on top of the gross wage. Use this calculator to see the full picture - and what the employee actually takes home — before you make the decision to hire.
2026/27
Current HMRC rates
Free to use
No sign-up required
Annual or hourly
Both modes supported
Fixed fee
Agreed on the call
WHAT THIS SHOWS
Understanding the true cost of a hire
Most business owners think of salary as the cost of hiring someone. In reality, you pay significantly more than that. This calculator breaks down every component - so you know the real number before you commit.
Employer National Insurance
Employers pay NI at 15% on wages above the £5,000 secondary threshold. This is paid on top of the salary - the employee doesn't see it, but you pay it. On a £30,000 salary that's an additional £3,750 per year before pension is considered.
Employer pension
Auto-enrolment requires a minimum 3% employer pension contribution on qualifying earnings. The calculator lets you set your actual contribution rate so you can see the full cost including pension - not just the wage bill.
Employee take-home
The calculator also shows what the employee actually receives after income tax, employee NI and their own pension contribution. Useful when discussing offers - you can show candidates what their net pay will look like alongside the gross figure.
The cost multiplier
The headline result - how much every £1 of salary actually costs your business. For most salaries this is between £1.13 and £1.20. A useful benchmark when budgeting for headcount or comparing the cost of employees vs contractors.
HOW TO USE THIS CALCULATOR
Choose salary type
Annual salary or hourly rate
Set pension contribution
Employer % you contribute
Choose full or part year
Pro-rata if mid-year hire
See total cost to company
Everything included, live
Employee details
Employee
What they receive and pay personally
Employer
What this hire costs your company
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YOUR SITUATION IS UNIQUE
The calculator shows the numbers - we help you make the right decision
Knowing the cost of a hire is only part of the picture. Whether to employ someone directly, use a contractor, or structure your team differently all depends on your specific business - your turnover, your tax position, your growth plans and your risk appetite. A qualified accountant can help you think through the full picture before you commit.
Book a free 20-minute call →COMMON QUESTIONS
PAYE & staff costs - your questions answered
Everything you need to know before making a hiring decision.
What does it actually cost to employ someone on a £30,000 salary?
At £30,000 gross with a 3% employer pension contribution, the total cost to your company is approximately £34,650 per year - made up of the £30,000 salary, £3,750 employer NI (15% above the £5,000 threshold) and £900 pension. The employee takes home around £23,700 after income tax, employee NI and their own pension contribution.
What is the employer NI secondary threshold and why does it matter?
The secondary threshold is the point above which you start paying employer National Insurance - currently £5,000 per year for 2026/27. Below this amount you pay no employer NI. This matters when deciding on salary levels, particularly for part-time roles or apprentices where keeping salary below the threshold can meaningfully reduce your on-costs.
Do I have to offer a pension to all employees?
Under auto-enrolment rules, you must enrol eligible employees into a workplace pension and contribute a minimum of 3% on qualifying earnings. Employees must be aged 22 or over, earn above £10,000 per year and work in the UK. Younger or lower-earning workers can opt in. Failing to comply with auto-enrolment carries significant penalties from The Pensions Regulator.
Is it cheaper to use a contractor instead of an employee?
On paper, contractors don't attract employer NI or pension contributions - which can make them look cheaper. However, IR35 rules mean that if a contractor works in a way that resembles employment, HMRC may treat the relationship as employed for tax purposes, removing that advantage. The right answer depends on the nature of the work, how the engagement is structured and your wider risk position. Always take advice before making the decision.
What is the Employment Allowance and do I qualify?
The Employment Allowance allows eligible employers to reduce their employer NI bill by up to £10,500 per year (2026/27). Most small businesses qualify - the main exception is single-director companies where the director is the only employee. If you qualify, it effectively means the first £10,500 of employer NI is free, which can significantly reduce the cost of your first few hires. The calculator does not currently apply the Employment Allowance - speak to your accountant about whether you can claim it.
How does the hourly rate mode work?
Enter the employee's hourly rate and their average monthly hours. The calculator multiplies these to produce an equivalent annual salary (hourly rate × monthly hours × 12) and then runs all the same PAYE and NI calculations as the annual salary mode. This is useful for part-time, casual or variable-hours staff where you know the rate and expected hours but not the annual figure.
What isn't included in this calculator?
The calculator covers gross salary, employer NI, employer pension, income tax and employee NI. It does not include student loan repayments, salary sacrifice arrangements, benefits in kind, the Apprenticeship Levy (applicable on payrolls above £3 million), or any other deductions that may affect your specific payroll. For a complete picture of your employment costs, speak to a qualified accountant.
GET STARTED
Thinking about growing your team?
Pay less tax. Make more money. Free up more time.
Book a free 20-minute call with Bjorgvin. We'll look at the full cost of your hiring plans, help you structure your payroll tax-efficiently and agree a fixed fee - on the call, not after it.
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Chartered accountants, tax advisors and strategists for UK SMEs and property investors. Based at Halton Mill, Lancaster.
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