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UK Employee Cost Formula:
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The UK Employee Cost Calculator estimates the total cost of employing someone in the United Kingdom for the 2025/26 tax year, including salary, employer National Insurance contributions, pension costs, and additional benefits.
The calculator uses the UK employee cost formula:
Where:
Explanation: The calculation accounts for the 15% employer National Insurance contribution on earnings above the £175 per week threshold, plus all other employment costs.
Details: Understanding the true cost of employment is crucial for business budgeting, financial planning, and making informed hiring decisions. The total cost is typically 15-30% higher than the base salary alone.
Tips: Enter annual salary in GBP, annual pension contributions, and annual benefits cost. All values must be non-negative numbers representing annual amounts.
Q1: What is the National Insurance threshold for 2025/26?
A: The employer National Insurance threshold is £175 per week (£9,100 annually) for the 2025/26 tax year.
Q2: Is the 15% National Insurance rate fixed?
A: The 15% rate applies to employer National Insurance contributions for earnings above the threshold. Rates may vary for specific circumstances or future tax years.
Q3: What costs are included in benefits?
A: Benefits include health insurance, company car, private medical cover, life insurance, bonuses, and any other non-salary compensation provided to employees.
Q4: Are apprenticeship levies included?
A: This calculator focuses on core employment costs. Apprenticeship levies and other specific business taxes should be calculated separately based on your company's circumstances.
Q5: How accurate is this calculation for part-time employees?
A: For part-time employees, ensure all figures are pro-rated to reflect actual working hours and proportional costs.