UK Employer Rates and Thresholds 2026/27

Employers pay Class 1 National Insurance at 15% on each employee's earnings above the secondary threshold of £5,000 a year (£96 a week, £417 a month). There is no upper limit. Both figures have applied since April 2025, when the rate rose from 13.8% and the threshold fell from £9,100.

Employers pay 0% on earnings up to £50,270 a year for employees under 21, apprentices under 25 and eligible veterans. Class 1A National Insurance on taxable benefits and on termination awards over £30,000 is also 15%.

Employees pay 8% on earnings between the primary threshold and the upper earnings limit, and 2% above it (category A). That is deducted from pay and isn't an employer cost.

The Employment Allowance cuts an eligible employer's Class 1 National Insurance bill by up to £10,500 a year. Since April 2025, employers whose NI bill was over £100,000 can claim it too; the old £100,000 limit only applies to claims for 2024/25 or earlier.

A company whose only employee paid above the secondary threshold is its sole director can't claim. Through an Employer of Record, the provider is the employer, so any allowance is the provider's to claim, and it's unlikely to reduce your costs.

Employers must auto-enrol eligible workers who earn over £10,000 a year (the earnings trigger), and contribute at least 3% of their qualifying earnings, with 8% in total including the employee's share.

Qualifying earnings are the band between £6,240 and £50,270 a year, so the legal minimum employer contribution tops out at £1,320.90. Many employers pay more, or pay on full salary.

Employers with an annual pay bill over £3 million, including connected companies, pay the levy at 0.5% of their pay bill, less a £15,000 annual allowance. Most Employers of Record are above the threshold; some pass the levy on to clients and some absorb it.

On a 37.5-hour week, the National Living Wage comes to about £24,785 a year.

Statutory Sick Pay is paid by the employer from the first day of sickness (since 6 April 2026), at £123.25 a week or 80% of average weekly earnings if lower in 2026/27. Employers can't recover SSP from HMRC.

For an employee with five qualifying days a week, the daily rate is £24.65. Since 6 April 2026 there are no waiting days: SSP is due from the first day of sickness.

Employers can recover 92% of these payments from HMRC, or 109% if their total Class 1 National Insurance for the previous tax year was £45,000 or less. Statutory Sick Pay can't be recovered.

• 5.6 weeks of paid leave a year (4 weeks plus 1.6 weeks), capped at 28 days, which is 28 days for a five-day week. Employers can count bank holidays towards it. Leave can't be replaced by payment except on termination.
• Working time, including overtime, may not exceed an average of 48 hours a week, normally averaged over 17 weeks, unless the worker agrees in writing to opt out. The worker can end an opt-out with at least seven days' notice (or the notice in the agreement, up to three months).

After one month's service, the employer must give at least one week's notice; from two years, one week per complete year of service, up to 12 weeks after 12 years. The employee must give at least one week. Contracts often set longer periods.

• Redundancy pay: half a week's pay for each full year of service under age 22, one week's pay for each year aged 22 to 40, and one and a half weeks' pay for each year aged 41 or over. Service is capped at 20 years and weekly pay at £751, so the maximum is £22,530 for redundancies from 6 April 2026. The first £30,000 isn't taxable.
• Unfair dismissal: Employees currently need two years' continuous service to claim ordinary unfair dismissal. The Employment Rights Act 2025 cuts this to six months and removes the cap on the compensatory award from 1 January 2027, including where notice is given before that date but employment ends on or after it.

Income tax is withheld from the employee's pay through PAYE, so it isn't an employer cost, but it decides take-home pay. The personal allowance is £12,570 everywhere in the UK.