Employer National Insurance in 2026/27: 15%, a £5,000 threshold, and a £10,500 Employment Allowance

Employer national insurance in 2026/27 is 15% of each employee's earnings above £5,000 a year, the rate and threshold in force since 6 April 2025, when they replaced 13.8% above £9,100. The Employment Allowance, which reduces an employer's bill by up to £10,500 a year, is also unchanged from 2025/26. On a £30,000 salary the employer now pays £3,750 a year instead of £2,884.20, about 30% more.

The rate rise got the headlines, but at that salary the lower threshold adds nearly twice as much cost. For small employers, the larger allowance offsets much of the increase.

What changed in April 2025, and employer National Insurance rates for 2026/27

The National Insurance Contributions (Secondary Class 1 Contributions) Act 2025 made three changes from 6 April 2025 to Class 1 National Insurance contributions (NICs), the contributions charged on employees' earnings. The Act raised the employer (secondary) Class 1 rate from 13.8% to 15%. It cut the secondary threshold, the earnings level above which the employer starts paying, from £9,100 to £5,000 a year. And it raised the Employment Allowance from £5,000 to £10,500, removing the rule that excluded employers with a NICs bill of £100,000 or more the year before.

For the 2026/27 tax year (6 April 2026 to 5 April 2027), the figures published by HMRC (HM Revenue & Customs, the UK tax authority) are:

• Employer rate: 15% on every pound above the threshold, with no upper earnings limit.
• Secondary threshold: £96 a week, £417 a month, £5,000 a year.
• Employment Allowance: £10,500.
• Upper thresholds for the zero-rate reliefs: £50,270 a year for under-21s (the upper secondary threshold, UST), apprentices under 25 (the apprentice upper secondary threshold, AUST) and veterans; £25,000 a year for freeport and investment zone hires.

The government fixed the £5,000 threshold until 5 April 2028, and the November 2025 Budget extended the freeze to April 2031, with legislation due in early 2028. The next Budget, on 28 October 2026, may change the 2027/28 figures.

How the secondary threshold applies each pay period

Employer NICs are calculated each time an employee is paid, not once a year. HMRC's employer guidance (CWG2) sets the earnings period as the regular interval between pay days, so a monthly-paid employee is measured against £417 and a weekly-paid one against £96. Company directors are the exception: they use an annual earnings period.

A weekly-paid worker who earns £90 one week costs the employer nothing in NICs that week. The next week, at £300, the employer pays (£300 − £96) × 15% = £30.60. The rules do not average the two weeks.

Worked example: employer NICs on a £30,000 salary

Take one employee on £30,000 a year, paid £2,500 a month, on category letter A (the standard National Insurance category for most employees).

• 2024/25 (before the change): (£30,000 − £9,100) × 13.8% = £20,900 × 13.8% = £2,884.20
• 2025/26 and 2026/27: (£30,000 − £5,000) × 15% = £25,000 × 15% = £3,750.00

The cost of employing the same person rises by £865.80 a year. The lower threshold makes another £4,100 of salary chargeable, which at the old 13.8% rate is £565.80. The rate rise adds 1.2 percentage points on £25,000, which is £300.

Run monthly, the calculation is (£2,500 − £417) × 15% = £312.45, or £3,749.40 over twelve months. The 60p gap with the annual figure comes from the monthly threshold being set at £417 rather than £416.67 (£5,000 ÷ 12).

Part-time and low earners: why the £5,000 threshold matters most

Under the old £9,100 threshold, an employee on £9,000 a year cost nothing in employer NICs. That employee now costs (£9,000 − £5,000) × 15% = £600 a year, or £49.95 on each £750 monthly payment ((£750 − £417) × 15%). The £600 equals 6.7% of the employee's wages, up from nothing.

Part-time staff, students on weekend shifts and seasonal workers often earn between £5,000 and £9,100 a year, the band that became chargeable in April 2025. For a business with a large part-time workforce, the threshold change accounts for most of the increase.

The Employment Allowance for 2026/27: £10,500 and no size test

The Employment Allowance reduces an employer's secondary Class 1 NICs bill by up to £10,500 a year, but not Class 1A contributions on benefits in kind such as company cars. Since April 2025 there is no size test, so an employer whose NICs bill was above £100,000 last year can now claim.

Public bodies and businesses doing more than half their work in the public sector cannot claim (charities can), and neither can a company whose sole director is its only employee liable for employer NICs. Deemed payments under IR35 (the off-payroll rules for contractors working through their own company) and household staff such as a nanny (unless a care or support worker) cannot be included.

Connected companies. Only one company in a connected group (for example, companies under common control) can claim. Spreading staff across three companies does not produce three allowances; HMRC thought of that. An employer with several payrolls claims against only one.

How to claim. The employer sets the "Employment Allowance indicator" to "Yes" on an Employer Payment Summary (EPS), the payroll return that reports adjustments to what the employer owes HMRC. The allowance then reduces each employer NICs payment until the £10,500 is used or the tax year ends. The employer must claim again each tax year, and can claim missed years for up to the previous four tax years (with the £100,000 test and £5,000 amount still applying to 2024/25 and earlier).

For a small employer, the larger allowance can more than offset the increase. Take four employees on £30,000:

• 2024/25: 4 × £2,884.20 = £11,536.80, less £5,000 = £6,536.80
• 2026/27: 4 × £3,750 = £15,000, less £10,500 = £4,500.00

That employer pays £2,036.80 less than before the April 2025 changes. The £5,500 rise in the allowance covers the extra £865.80 per employee for up to six staff on £30,000. At seven staff, the net bill is higher than in 2024/25 (£15,750 against £15,189.40).

Zero-rate reliefs that still reduce employer NICs

Four reliefs set the employer rate to 0% up to a higher threshold. Each relief is applied through the employee's category letter, so the payroll record needs the right letter from the first pay day.

• Employees under 21 (letter M): 0% on earnings up to £50,270 a year (£967 a week). The maximum saving in 2026/27 is (£50,270 − £5,000) × 15% = £6,790.50 per employee.
• Apprentices under 25 (letter H): 0% up to the same £50,270, for the length of a government-approved apprenticeship (an approved apprenticeship agreement in England, or the Welsh, Scottish and Northern Irish equivalents).
• Veterans (letter V): 0% up to £50,270 for 12 months from the first day of the veteran's first civilian job after leaving the regular armed forces. Regulations made in 2026 extended this relief through 2026/27 and 2027/28.
• Freeport and investment zone hires (letters F and N, with variants): 0% up to £25,000 a year for the first 36 months of employment, worth up to (£25,000 − £5,000) × 15% = £3,000 a year. The new hire must spend at least 60% of their working time in a designated special tax site and must not have worked for the employer or a connected employer in the previous 24 months. Employment must start before 30 September 2031 (English freeports) or 30 September 2034 (Scottish and Welsh freeports, investment zones).

A 19-year-old on £30,000 under letter M costs the employer nothing in NICs. Under letter A, the same employee costs £3,750. The Employment Allowance then reduces whatever employer NICs bill remains after the reliefs.

Summary

Employer national insurance in 2026/27 is 15% on earnings above £96 a week, £417 a month or £5,000 a year, assessed separately in each pay period. On a £30,000 salary the lower threshold adds more cost than the rate rise, and earnings between £5,000 and £9,100 are now chargeable. The £10,500 Employment Allowance, claimed each year on the EPS by one company per connected group, more than offsets the increase for an employer with up to six staff on £30,000. The under-21, apprentice, veteran, freeport and investment zone reliefs cut the cost further, but only with the correct category letter.

Flux applies the current thresholds, category letters and Employment Allowance on every pay run, so the employer NICs figure partners show their clients already reflects the reliefs each client is entitled to.