Employer's National Insurance is the Class 1 contribution a UK employer pays on top of an employee's wages. For the 2026 to 2027 tax year it's 15% on earnings above the secondary threshold of £96 a week (£5,000 a year), as of October 2026, with a 0% rate up to £967 a week for most employees under 21, apprentices under 25 and veterans in their first civilian job.
When you hire your first employee, the salary isn't the full cost. Employer's National Insurance comes on top, and it's paid through payroll. Here's how GOV.UK sets out the rates and thresholds for 2026 to 2027.
Employer's vs employee's National Insurance
An employee's Class 1 National Insurance has two parts: the contributions you deduct from their pay, and the contributions you pay yourself. GOV.UK calls them primary and secondary contributions. You report and pay both to HMRC through PAYE as part of your monthly bill, but only the primary part ever comes out of the employee's pay. The rates also apply to company directors, although directors' contributions can be worked out differently.
The thresholds for 2026 to 2027
| Threshold | Weekly | Monthly | Yearly |
|---|---|---|---|
| Secondary threshold (employer starts paying) | £96 | £417 | £5,000 |
| Freeport and Investment Zone upper secondary threshold | £481 | £2,083 | £25,000 |
| Upper secondary threshold for under 21s, apprentices under 25 and veterans | £967 | £4,189 | £50,270 |
The secondary threshold is much lower than the point where employees start paying (£242 a week), so you'll pay National Insurance on many part-time staff who pay none themselves.
The employer rates by category letter
Every employee has a category letter, and it decides your rate on each band of their earnings:
| Category letter | Who | £96 to £481 a week | £481.01 to £967 | Over £967 |
|---|---|---|---|---|
| A | Most employees | 15% | 15% | 15% |
| C | Employees over State Pension age | 15% | 15% | 15% |
| M | Employees under 21 | 0% | 0% | 15% |
| H | Apprentices under 25 | 0% | 0% | 15% |
| V | Veterans in their first job since leaving the armed forces | 0% | 0% | 15% |
| F | Employees at a special tax site in a Freeport | 0% | 15% | 15% |
| N | Employees at a special tax site in an Investment Zone | 0% | 15% | 15% |
Two details most small employers miss. First, the under-21, apprentice and veteran letters mean you pay nothing on their earnings up to £967 a week, which can make a big difference to the cost of a first hire. Second, category C: employees over State Pension age pay no National Insurance themselves, but you still pay the full 15% on their earnings. Getting the letter right in your payroll software is what makes all this work.
Freeports and Investment Zones
If your business has employees working at a special tax site within a Freeport or an Investment Zone, there's a separate set of letters: F, I, L and S for Freeports, and N, E, D and K for Investment Zones. For these letters, you pay 0% on earnings up to the upper secondary threshold of £481 a week (£25,000 a year), then 15% above it. It only applies to employees who work at the special tax site, so check where each person is based before you change their letter. For most small businesses outside those sites, letter A applies to nearly everyone.
Class 1A and 1B: National Insurance on benefits
| Class | What it covers | Rate for 2026 to 2027 |
|---|---|---|
| Class 1A | Work benefits such as a company mobile phone, reported and paid after the tax year ends | 15% |
| Class 1A | Termination awards over £30,000 and certain sporting testimonial payments | 15% |
| Class 1B | Small or irregular benefits covered by a PAYE Settlement Agreement | 15% |
So a perk isn't free just because it isn't salary. Factor the 15% into any benefit before you offer it.
Employment Allowance: up to £10,500 off
Employment Allowance lets eligible employers reduce their annual employer's Class 1 National Insurance by up to £10,500. It comes off each payroll run until the allowance is used up or the tax year ends. Since April 2025, employers with Class 1 liabilities over £100,000 can apply too.
The trap for one-person companies: if your company has only one director, that director can't be the only employee paying secondary Class 1 National Insurance. Connected companies can only claim once across the group, and household staff like a nanny or gardener don't count unless they're a carer or support worker.
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Working out the cost of a new hire
- Start with the gross salary you plan to pay.
- Check the employee's category letter: under 21, apprentice under 25, veteran or over State Pension age all change the sum.
- Take the secondary threshold of £5,000 a year off the salary, or the higher threshold for the 0% groups.
- Apply 15% to the earnings above it.
- Add 15% Class 1A on any benefits you provide.
- Subtract any Employment Allowance you're eligible for, then add pension contributions.
If you're weighing a hire against tools or automation, this breakdown of what an AI employee really costs is a useful comparison, and it's worth knowing what triggers HMRC investigations into small businesses before you set up payroll.
My verdict
Employer's National Insurance at 15% from £5,000 a year is a real cost of growing a team, and it lands on part-timers you might assume are below the line. Use the 0% letters where they apply, claim Employment Allowance if you're eligible, and never forget the over-State-Pension-age employee: they pay nothing, but you still pay 15%.
Frequently asked questions
What is the employer's National Insurance rate?
15% for 2026 to 2027, as of October 2026, on earnings above the secondary threshold.
When does an employer start paying National Insurance?
Above the secondary threshold of £96 a week, £417 a month or £5,000 a year for 2026 to 2027.
Do employers pay National Insurance for under 21s?
Not on earnings up to £967 a week (£50,270 a year). Above that, 15% applies.
Do employers pay National Insurance for staff over State Pension age?
Yes. The employee pays none, but the employer pays 15% under category C.
What is Class 1A National Insurance?
Employer's National Insurance on work benefits such as a company phone, at 15% for 2026 to 2027, paid after the tax year ends.
How much is the Employment Allowance?
Eligible employers can reduce their employer's Class 1 National Insurance by up to £10,500 a year.
