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Cost of employing someone calculator

Work out what a first employee or apprentice really costs a year: wages, employer National Insurance, Employment Allowance, the minimum workplace pension and the cost per hour actually worked once holiday is taken out. Uses GOV.UK rates for 2026 to 2027.

What goes into the cost

Wages. From 1 April 2026 the minimum wage is £12.71 an hour at 21 and over, £10.85 at 18 to 20 and £8 under 18. Apprentices get £8 if they're under 19 or in the first year of their apprenticeship, and the rate for their age after that (GOV.UK). Almost all workers get 5.6 weeks' paid holiday a year, which is 28 days for a five-day week, and bank holidays can count towards it (GOV.UK). That holiday is paid but not worked, which is why the cost per hour actually worked is higher than the hourly rate.

Employer National Insurance. For 2026 to 2027 it's 15% on earnings above £5,000 a year. For employees under 21, and apprentices under 25, the employer rate is 0% up to £50,270. Employment Allowance cuts your employer NI bill by up to £10,500 a year (GOV.UK). A company whose only employee paid above the secondary threshold is its director can't claim it (GOV.UK).

Pension. You must automatically enrol staff aged 22 to State Pension age who earn over £10,000 a year. The minimum is 8% of qualifying earnings, which for 2026 to 2027 is pay between £6,240 and £50,270, and at least 3% must come from you (The Pensions Regulator, thresholds). Other staff can ask to join, and you may have to pay in for some of them, so check The Pensions Regulator's duties checker when you hire.

What's not included. Statutory Sick Pay is £123.25 a week, or 80% of average weekly earnings if that's lower (GOV.UK). Employer's liability insurance is a legal requirement for most employers. Then there's tools, PPE, uniforms, training and a payroll app.

Is it worth it? Compare the cost per hour actually worked with what you charge for that time, using the day-rate calculator and how much to charge per hour. If you'd hire someone just to answer the phone, compare an AI call-answering tool using the AI tool break-even calculator. If you work through a company, see the sole trader vs limited company calculator.

Rates from GOV.UK and The Pensions Regulator for 2026 to 2027, checked 15 October 2026. England, Wales, Scotland and Northern Ireland use the same NI and minimum wage rates. An estimate, not payroll or legal advice.

Questions

How much does it cost to employ someone on minimum wage in 2026?

For 37.5 hours a week at £12.71, wages are about £24,785 a year. Employer NI at 15% above £5,000 is about £2,968, which Employment Allowance can cover in full. The minimum employer pension is about £556. Use the calculator for your own figures.

Do I pay employer National Insurance for an apprentice?

Not on earnings up to £50,270 a year if the apprentice is under 25, and the same applies to any employee under 21 (GOV.UK, 2026 to 2027).

What is the minimum wage for an apprentice in 2026?

£8 an hour from 1 April 2026 for apprentices under 19 or in their first year. After that, they get the minimum wage for their age.

Do I have to pay into a pension for my employee?

Yes, if they're 22 to State Pension age and earn over £10,000 a year. You must pay at least 3% of their pay between £6,240 and £50,270.

Can a sole trader claim Employment Allowance?

Generally yes, once you have employees and pay employer National Insurance. The exclusion GOV.UK highlights is a company whose only employee paid above the secondary threshold is a director.