Employment cost inputs
How to Calculate the Total Cost of an Employee
Estimate the annual and monthly cost of employing someone by combining gross salary, employer National Insurance, pension contributions, and additional annual costs.
Select the tax year
Choose the tax year for the employer National Insurance calculation. The calculator uses versioned thresholds and rates for each tax year from 2022/23 to 2026/27.
Enter the gross annual salary
Enter the employee's contractual gross annual salary before deductions. This is the starting point for calculating employer National Insurance and the other employment costs.
Enter the employer pension contribution
Enter the percentage your organisation contributes to the employee's pension. This is an additional employer cost and is not the employee pension deduction from their pay.
Add other annual employment costs
Enter a combined annual estimate for benefits and overheads such as private healthcare, equipment, training, insurance, software, or workplace costs. Use zero if you want to calculate only the core payroll cost.
Review the annual and monthly totals
Select Calculate to see gross salary, employer NI, employer pension, other annual costs, and total annual employment cost. The tool also shows the estimated monthly cost by dividing the annual total by 12.
Check costs outside the estimate
The result is a planning estimate. Consider bonuses, statutory pay, Apprenticeship Levy, recruitment, absence, redundancy exposure, and other variable costs that are not automatically calculated, adding suitable amounts to other annual costs where appropriate.
About this tool
How employer cost is built
The total adds gross salary, employer National Insurance from the selected tax year's ruleset, the entered employer pension percentage, and optional annual benefits or other costs.
Versioned employer National Insurance
The calculator uses versioned employer NI thresholds and rates:
- 2022/23 to 2024/25: £9,100 threshold, 13.8% rate
- 2025/26 to 2026/27: £5,000 threshold, 15% rate
Employer NI is calculated on gross salary above the threshold for the selected tax year.
Costs outside this estimate
The tool does not automatically calculate Apprenticeship Levy, statutory pay, bonuses, variable benefits, recruitment, equipment, workspace, insurance, training, or redundancy exposure. Include relevant amounts in the editable other-cost field.
Frequently Asked Questions
Is employer NI deducted from salary?
No. Employer National Insurance is generally an additional employer cost and is not taken from the employee's gross salary.
Does the pension input mean employee pension?
No. It represents the employer contribution added to employment cost.
Is this a payroll quote?
No. It is a planning estimate using the displayed ruleset and entered assumptions.
What tax years are supported?
The calculator supports tax years 2022/23 through 2026/27, with versioned employer National Insurance thresholds and rates for each year.
How accurate is the employer NI calculation?
The employer NI calculation uses the same versioned thresholds and rates as HMRC's rules for each tax year. However, actual NI may vary based on specific circumstances such as employment allowances, director's NI, or other exemptions.