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PAYE and staff cost calculator.
A salary on paper is never what a hire actually costs. Employer National Insurance, pension contributions and other on-costs can add 15–20% or more on top of the gross wage. Use this calculator to see the full picture — and what the employee actually takes home — before you make the decision to hire.
What you would advertise the role at.
What about Employment Allowance?
It is not included above, deliberately. Employment Allowance lets eligible employers reduce their annual employer National Insurance bill — but whether you can claim it, and how much is left to claim, depends on your whole payroll rather than one salary:
- A sole director with no other employees can't claim it at all.
- A director plus one or two staff usually can — but the allowance may already be used up by someone else's National Insurance.
- Adding to a team of five or more: same again. The allowance applies once across the business, not once per hire.
The figures above therefore show the cost before any allowance — the safe way round, since you can only be better off. Ask us on the call and we'll tell you where you stand.
2026/27 rates. Everything is calculated in your browser; nothing you type is sent anywhere or stored.
Employer National Insurance is charged at 15% on earnings above £5,000.
This is a guide, not advice. Your own position depends on details a calculator cannot know — book a free call and we will work through it properly.
What it costs you
What they take home
Want to understand the full cost of your team?
Every situation is different. Send your numbers across and Björgvin will review them before your free 20-minute call — so you get answers, in plain English, with clear next steps to help you keep more of what you earn.
What this shows
Understanding the true cost of a hire
Most business owners think of salary as the cost of hiring someone. In reality, you pay significantly more than that. This calculator breaks down every component — so you know the real number before you commit.
Employer National Insurance
Employers pay NI at 15% on wages above the £5,000 secondary threshold. This is paid on top of the salary — the employee doesn't see it, but you pay it. On a £30,000 salary that's an additional £3,750 per year before pension is considered.
Employer pension
Auto-enrolment requires a minimum 3% employer pension contribution on qualifying earnings. The calculator lets you set your actual contribution rate so you can see the full cost including pension — not just the wage bill.
Employee take-home
The calculator also shows what the employee actually receives after income tax and employee NI. Useful when discussing offers — you can show candidates what their net pay will look like alongside the gross figure.
The cost multiplier
The headline result — how much every £1 of salary actually costs your business. For most salaries this is between £1.13 and £1.20. A useful benchmark when budgeting for headcount or comparing the cost of employees vs contractors.
Your situation is unique
The calculator shows the numbers — we help you make the right decision
Knowing the cost of a hire is only part of the picture. Whether to employ someone directly, use a contractor, or structure your team differently all depends on your specific business — your turnover, your tax position, your growth plans and your risk appetite. A qualified accountant can help you think through the full picture before you commit.
Common questions
PAYE & staff costs — your questions answered
Everything you need to know before making a hiring decision.
Not covered here? Ask us directly — we answer within 1–2 working days.
What does it actually cost to employ someone on a £30,000 salary?
At £30,000 gross with a 3% employer pension contribution, the total cost to your company is approximately £34,650 per year — made up of the £30,000 salary, £3,750 employer NI (15% above the £5,000 threshold) and £900 pension. The employee takes home around £23,700 after income tax, employee NI and their own pension contribution.
What is the employer NI secondary threshold and why does it matter?
The secondary threshold is the point above which you start paying employer National Insurance — currently £5,000 per year for 2026/27. Below this amount you pay no employer NI. This matters when deciding on salary levels, particularly for part-time roles or apprentices where keeping salary below the threshold can meaningfully reduce your on-costs.
Do I have to offer a pension to all employees?
Under auto-enrolment rules, you must enrol eligible employees into a workplace pension and contribute a minimum of 3% on qualifying earnings. Employees must be aged 22 or over, earn above £10,000 per year and work in the UK. Younger or lower-earning workers can opt in. Failing to comply with auto-enrolment carries significant penalties from The Pensions Regulator.
Is it cheaper to use a contractor instead of an employee?
On paper, contractors don't attract employer NI or pension contributions — which can make them look cheaper. However, IR35 rules mean that if a contractor works in a way that resembles employment, HMRC may treat the relationship as employed for tax purposes, removing that advantage. The right answer depends on the nature of the work, how the engagement is structured and your wider risk position. Always take advice before making the decision.
What is the Employment Allowance and do I qualify?
The Employment Allowance allows eligible employers to reduce their employer NI bill by up to £10,500 per year (2026/27). Most small businesses qualify — the main exception is single-director companies where the director is the only employee. If you qualify, it effectively means the first £10,500 of employer NI is free, which can significantly reduce the cost of your first few hires. The calculator does not currently apply the Employment Allowance — speak to your accountant about whether you can claim it.
What isn't included in this calculator?
The calculator covers gross salary, employer NI, employer pension, income tax and employee NI. It does not include student loan repayments, salary sacrifice arrangements, benefits in kind, the Apprenticeship Levy (applicable on payrolls above £3 million), or any other deductions that may affect your specific payroll. For a complete picture of your employment costs, speak to a qualified accountant.
Get started
Numbers are a start. A conversation is better.
Book a free 20-minute call with Björgvin. We will go through your actual position — the bits a calculator cannot know — and agree a fixed fee on the call.
- Free 20-minute call
- Fee agreed on the call
- No minimum contract
- CIMA & AAT qualified
