March 27, 2026
By Merranti

Employer’s National Insurance Rates 2026/27 (UK Guide)

If you run a limited company or employ staff, you need to understand:

How much Employer’s National Insurance (NI) do I pay in 2026/27?

Employer’s National Insurance (also called Secondary Class 1 NIC) is paid by the employer on employees’ earnings above a certain threshold.

It is separate from:

Employee National Insurance
Income Tax
Corporation Tax

Below are the current rates and thresholds for the 2026/27 tax year.

Employer’s National Insurance Rate 2026/27

For the 2026/27 tax year:

Employer’s National Insurance rate: 15%

This applies to earnings above the Secondary Threshold.

Secondary Threshold 2026/27

Employer’s NI is only due on earnings above the Secondary Threshold.

For 2026/27:

£5,000 per year
£417 per month (approx.)
£96 per week (approx.)

This means:

Employers pay 15% on employee earnings above £5,000 per year.

Example: Employer NIC Calculation (2026/27)

Employee annual salary: £30,000

Secondary Threshold: £5,000

NICable amount:

£30,000 – £5,000 = £25,000

Employer NIC:

£25,000 × 15% = £3,750 per year

This is a cost to the company — not deducted from the employee’s pay.

Employer’s NI for Directors

Directors are subject to the same 15% rate.

However, NIC for directors is usually calculated on an annual earnings basis rather than weekly or monthly.

Many small company directors choose a salary around the Secondary Threshold to:

Maintain State Pension record
Avoid Employer’s NI
Avoid Employee’s NI

This strategy should always be reviewed alongside dividend planning and Employment Allowance eligibility.

Employment Allowance 2026/27

The Employment Allowance allows eligible employers to reduce their Employer NIC bill.

For 2026/27:

The allowance is up to £10,500 per year (subject to eligibility criteria).

This means qualifying businesses can offset up to £10,500 of Employer NIC liability.

Who Can Claim Employment Allowance?

You may be eligible if:

You are a business or charity
Your Employer NIC liability is not caught by exclusion rules
You have employees

However, companies where the only employee is a sole director are generally not eligible.

Eligibility must be reviewed carefully.

Special Employer NIC Rates

While 15% is the standard rate, there are special cases:

1. Under 21s

Employers do not pay Employer NIC on employees under 21 up to the Upper Secondary Threshold.

2. Apprentices Under 25

Similar relief applies up to a specified threshold.

3. Veterans (First Year of Employment)

Employer NIC relief may apply for the first year of employment of qualifying veterans.

These reliefs reduce Employer NIC liability significantly in qualifying cases.

How Employer NIC Affects Limited Company Directors

For owner-managed businesses, Employer NIC impacts:

Salary strategy
Corporation Tax
Overall tax efficiency

Higher Employer NIC rates make large salaries less attractive compared to dividends in many small companies.

However, dividends must be supported by distributable profits.

Optimal remuneration planning depends on:

Total profit
Other income
Employment Allowance eligibility
Pension contribution strategy

Is Employer NIC Deductible for Corporation Tax?

Yes.

Employer’s National Insurance is a deductible business expense.

This reduces taxable profit for Corporation Tax purposes.

For example:

Employer NIC paid: £3,750

Corporation Tax relief at 25%:

£3,750 × 25% = £937.50 effective tax relief

The net cost is therefore lower than the headline NIC figure.

When Is Employer NIC Paid?

Employer NIC is paid to HMRC:

Monthly (or quarterly for small PAYE schemes)
Alongside PAYE and Employee NIC
Via RTI (Real Time Information) submissions

Late payment results in:

Interest
Potential penalties

Why Employer NIC Matters in 2026

The increase to 15% makes Employer NIC one of the most significant employment costs.

For growing businesses, this affects:

Hiring decisions
Bonus planning
Director salary levels
Pension vs salary comparisons

Small changes in salary levels can materially affect Employer NIC liability.

Quick Reference Summary (2026/27)

Employer NIC rate: 15%
Secondary Threshold: £5,000 per year
Employment Allowance: Up to £10,500 (if eligible)
Employer NIC is deductible for Corporation Tax

Final Thoughts

Employer’s National Insurance at 15% represents a significant cost for UK employers in 2026/27.

For limited company directors, salary levels should be reviewed carefully to ensure tax efficiency.

For businesses with employees, Employment Allowance eligibility should be checked to reduce liability where possible.

Because remuneration planning interacts with Income Tax, Employee NIC, Corporation Tax, and dividend strategy, structured review is advisable before setting salary levels. Talk to Merranti Accounting today.