1. What is the Employee Cost Calculator?

The Employee Cost Calculator for the 2025/26 UK tax year helps employers calculate the total cost of employing staff, including salary, employer National Insurance contributions, and pension contributions.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( Salary \) — Annual salary in GBP
• \( Employer NI \) — National Insurance at 15% on earnings above £175 per week
• \( Pension \) — Employer pension contributions in GBP

Explanation: The calculation converts annual salary to weekly amounts to determine NI liability, then sums all components for the total employment cost.

3. Importance of Total Cost Calculation

Details: Understanding total employment costs is crucial for business budgeting, financial planning, and ensuring compliance with UK employment regulations and tax obligations.

4. Using the Calculator

Tips: Enter annual salary in GBP and employer pension contributions in GBP. All values must be valid positive numbers. The calculator automatically computes Employer NI based on current thresholds.

5. Frequently Asked Questions (FAQ)

Q1: What is the Employer NI threshold for 2025/26?
A: Employer National Insurance is payable at 15% on earnings above £175 per week (£9,100 annually).

Q2: Are pension contributions mandatory?
A: Under auto-enrolment rules, most employers must provide a workplace pension and make minimum contributions.

Q3: What other costs should employers consider?
A: Additional costs may include apprenticeship levy, benefits in kind, training costs, equipment, and office space.

Q4: How often should total cost be recalculated?
A: Recalculate when salaries change, at annual reviews, or when tax/NI thresholds are updated each tax year.

Q5: Is this calculator suitable for all employment types?
A: This calculator is designed for standard employment. Different rules may apply for contractors, directors, or specific industries.