1. What Is Employee Cost To Company?

Cost to Company (CTC) represents the total expenditure a business incurs for an employee in the UK. This includes not just the basic salary but all associated costs like benefits, employer National Insurance contributions, and pension contributions for the 2025/26 tax year.

2. How Does The Calculator Work?

The calculator uses the CTC formula:

Where:

• \( Salary \) — Gross annual salary before deductions
• \( Benefits \) — Additional employee benefits (car allowance, health insurance, etc.)
• \( Employer NI \) — National Insurance at 15% on earnings above £12,570 threshold
• \( Pension \) — Employer pension contribution at 3% of salary

Explanation: This calculation provides the true cost of employing someone in the UK, accounting for all mandatory employer contributions and optional benefits.

3. Importance Of CTC Calculation

Details: Accurate CTC calculation is essential for business budgeting, financial planning, comparing employment costs across different countries, and making informed hiring decisions. It helps employers understand the true financial impact of each employee.

4. Using The Calculator

Tips: Enter the gross annual salary in GBP and any additional benefits amount. The calculator will automatically compute employer National Insurance (15% above £12,570 threshold) and pension contributions (3% of salary) to give you the total cost to company.

5. Frequently Asked Questions (FAQ)

Q1: What is included in the benefits calculation?
A: Benefits include any additional compensation beyond salary such as car allowances, private health insurance, life insurance, bonuses, and other perks provided by the employer.

Q2: Is the employer NI rate fixed at 15%?
A: For the 2025/26 tax year, employer NI is 15% on earnings above £12,570. This rate may change in future tax years based on government policy.

Q3: Are pension contributions mandatory?
A: Yes, under auto-enrolment rules, employers must contribute at least 3% to eligible employees' pensions, though some employers may offer higher contributions.

Q4: How does this differ from take-home pay?
A: CTC represents the employer's total cost, while take-home pay is what the employee receives after deductions for income tax, employee NI, and pension contributions.

Q5: Should I include one-time costs in CTC?
A: CTC typically includes recurring annual costs. One-time expenses like recruitment fees or relocation costs are usually considered separate from ongoing employment costs.