Employer National Insurance contributions in 2026 are charged at 15% on employee earnings above the Secondary Threshold of £5,000 per year (£416.67 per month or £96.15 per week). This rate applies to Class 1, Class 1A, and Class 1B National Insurance contributions across the UK.
The rules represent a permanent shift in payroll costs for UK employers. To offset this change, the government set the Employment Allowance at £10,500 per year. Understanding these rates and allowances helps you budget payroll accurately and avoid unexpected HMRC charges.
What Are Employer National Insurance Contributions?
Employer National Insurance contributions (NICs) are taxes paid directly by businesses on the earnings of their employees. They are separate from employee National Insurance, which is deducted from staff pay packets.
Employers pay Class 1 NICs on cash wages, bonuses, and overtime. If you provide taxable perks such as company cars or private healthcare, you pay Class 1A NICs at the same 15% rate. If you settle employee expenses under a PAYE Settlement Agreement, you pay Class 1B NICs at 15%.
UK Employer National Insurance Rates and Thresholds for 2026
HMRC sets specific earnings thresholds where employer NICs begin. Unlike employee NI, employer contributions have no upper earnings limit. You continue paying 15% on all earnings above the secondary threshold.
| Threshold Name | Weekly Pay | Monthly Pay | Annual Pay | Employer NIC Rate |
|---|---|---|---|---|
| Secondary Threshold (ST) | £96.15 | £416.67 | £5,000 | 15.0% on earnings above threshold |
| Freeport / Investment Zone Upper Limit | £481.00 | £2,083.00 | £25,000 | 0% up to limit, then 15.0% |
| Upper Secondary Threshold (Under 21) | £967.00 | £4,189.00 | £50,270 | 0% up to £50,270, then 15.0% |
| Apprentice Upper Threshold (Under 25) | £967.00 | £4,189.00 | £50,270 | 0% up to £50,270, then 15.0% |
| Veterans Upper Secondary Threshold | £967.00 | £4,189.00 | £50,270 | 0% up to £50,270 (first 12 months) |
How to Calculate Employer National Insurance
Calculating your monthly liability is straightforward once you know an employee’s gross pay. Subtract the monthly secondary threshold of £416.67 from gross earnings, then multiply the remainder by 15%.
Here are three realistic payroll examples:
- Employee earning £25,000 per year: Total taxable pay is £20,000 (£25,000 minus £5,000). At 15%, the annual employer NIC is £3,000 (£250 per month).
- Employee earning £35,000 per year: Total taxable pay is £30,000 (£35,000 minus £5,000). At 15%, the annual employer NIC is £4,500 (£375 per month).
- Employee earning £55,000 per year: Total taxable pay is £50,000 (£55,000 minus £5,000). At 15%, the annual employer NIC is £7,500 (£625 per month).
When comparing business setups, review our sole trader vs limited company tax comparison to see how employer NI impacts company profits versus sole trader Class 4 NI.
The £10,500 Employment Allowance
The Employment Allowance allows eligible businesses to reduce their annual employer Class 1 NIC bill by up to £10,500. For many micro-businesses and small retailers, this allowance wipes out their employer NI liability completely.
Key rules for the Employment Allowance include:
- Universal eligibility: The £100,000 total employer NI cap previously required was removed. Businesses of any size can claim if they have qualifying employees.
- At least two employees required: Single-director companies where the director is the only employee cannot claim the allowance. You need at least one other employee on the payroll or two directors receiving earnings above the secondary threshold.
- Automatic claim via RTI: You claim the allowance through your commercial payroll software or HMRC Basic PAYE Tools when submitting your Employer Payment Summary (EPS).
For company owners planning remuneration, read our guide on paying yourself as a company director to structure your director salary and dividend split efficiently around these rules.
Special Exemption Categories (0% Employer NI)
HMRC provides relief for specific employee demographics. In these cases, employers pay 0% NICs on earnings up to the Upper Secondary Threshold of £50,270 per year (£967 per week):
- Employees under 21 (Category M): You pay zero employer NI on wages up to £50,270. Earnings above this figure are charged at 15%.
- Apprentices under 25 (Category H): Applies to apprentices following an approved government training framework.
- Armed forces veterans (Category V): 0% employer NI on earnings up to £50,270 during the employee’s first 12 months in civilian work.
- Freeport and Investment Zone workers: 0% employer contributions on earnings up to £25,000 for qualifying staff employed at a declared tax site.
Deadlines, Payment, and Reporting to HMRC
Employer NICs are paid monthly alongside employee PAYE income tax deductions. You must report all payroll figures to HMRC on or before payday using a Full Payment Submission (FPS).
Payment deadlines are strictly enforced:
- Electronic payment: Must clear into HMRC’s account by the 22nd of the following tax month.
- Cheque payment: Must reach HMRC by the 19th of the month.
- Quarterly payment option: If your average monthly PAYE and NIC liability is under £1,500, you can apply to pay quarterly rather than monthly.
Late payments trigger automatic interest and progressive penalty charges under HMRC rules. If you are preparing for wider digital compliance, consult our guide on Making Tax Digital for Income Tax to stay ahead of upcoming reporting requirements.
Conclusion
Employer National Insurance in 2026 demands careful payroll planning. With a 15% rate starting at £5,000 of earnings, each new hire adds measurable overhead. Ensure your business claims the full £10,500 Employment Allowance, assigns correct NI category letters for younger staff and apprentices, and processes Real Time Information (RTI) submissions promptly each month.
