Calculator · 2026/27
Employer cost calculator
A salary is not what a hire costs. Employer National Insurance adds 15% of everything above £5,000 with no upper limit, and a workplace pension adds more. This works out the real number, and how much of it reaches the employee.
Your result
Worked example: a £40,000 salary
- Take-home £32,319.60 71.4%
- Your NI £2,194.40 4.8%
- Income tax £5,486 12.1%
- Employer NI £5,250 11.6%
| Line | Amount | Note |
|---|---|---|
| Salary | £40,000 | What the offer says |
| Employer National Insurance | £5,250 | 15% of the £35,000 above £5,000 |
| Cost before pension | £45,250 | What the role actually costs |
| Employer pension at 3% | £1,200 | Auto-enrolment minimum |
| Total cost | £46,450 | |
| Employee receives | £32,319.60 | 69.6% of the total |
Excludes everything that is not statutory: recruitment, equipment, insurance, the apprenticeship levy for larger payrolls, and paid time off. Those are real and vary by employer, so they are not guessed at here.
Why this is the number that matters in a negotiation
Your employer is deciding about the total, not the headline. Asking for £2,000 more costs them £2,300 and you receive £1,440 of it. Asking for the same £2,000 as a pension contribution through salary sacrifice costs them £2,000 — less than the rise — and puts the whole £2,000 into your pension. Both sides do better, which is why sacrifice schemes exist at all.
Where £40,000 sits in the system
Every calculator on this site runs on the same thresholds, and the reason a figure surprises people is almost always that it sits near one of them. This is what is closest to the worked example above — the thresholds that decide what the next pound is worth, rather than what the last one was.
£40,000 sits between two things that matter. £6,205 below you is the Plan 4 (Scotland) repayment threshold, and £10,270 above you is the National Insurance upper earnings limit — so this salary is already past one change and approaching another.
| What changes | At | From here | |
|---|---|---|---|
| Plan 4 (Scotland) repayment threshold | £33,795 | −£6,205 | passed |
| National Insurance upper earnings limit | £50,270 | +£10,270 | ahead |
| Higher rate | £50,271 | +£10,271 | ahead |
| Plan 2 repayment threshold | £29,385 | −£10,615 | passed |
Measured against the 2026/27 parameters for England, Wales & Northern Ireland. Distances are on gross pay before any salary sacrifice, because that is the figure every one of these thresholds is tested against.
- £33,795 — Plan 4 (Scotland) takes 9% of the £6,205 above its threshold. It is not a tax, but it leaves the same pay on the same day.
- £50,270 — Above it your own National Insurance falls from 8% to 2%. That is £10,270 away, and it is the reason the higher rate stings less at the margin than the headline jump suggests.
- £50,271 — Crossing it does not re-tax what you already earn — only the pounds above it move to the higher rate, which is the single most misunderstood thing about UK income tax.
- £29,385 — Plan 2 takes 9% of the £10,615 above its threshold. It is not a tax, but it leaves the same pay on the same day.
What a ten per cent move would do
A swing of ten per cent either way from £40,000 does not cross a single band: the rate on further pay stays at 28% across the whole range from £36,000 to £44,000. That makes this an unusually predictable place to be paid, and it means the arithmetic below scales — a rise of any size in that range is worth the same proportion in your hand.
| If pay moved | Gross | Take-home | Change | Next £100 taxed at |
|---|---|---|---|---|
| −10% | £36,000 | £29,439.60 | −£2,880 | 28% |
| −5% | £38,000 | £30,879.60 | −£1,440 | 28% |
| +5% | £42,000 | £33,759.60 | +£1,440 | 28% |
| +10% | £44,000 | £35,199.60 | +£2,880 | 28% |
And what a pension contribution would buy
There is no threshold within reach below £40,000, so a pension contribution here is not about ducking under anything — it is simply the ordinary trade. Sacrificing £2,000 costs you £1,440 in take-home, because 28% of it was never going to reach you anyway, and puts the full £2,000 into the pot. That is £2,000 of saving for £1,440 of spending power — a ratio of 1.39 to one, and it is the same ratio for every pound until the next band.
Student loans on the same figure
A student loan is not a tax and it is not in any headline rate, but it leaves the same pay packet on the same day — so it belongs in any figure used to make a decision. This is what each plan takes at the worked example above.
Every one of the five repayment thresholds is behind this salary, so whichever plan you are on, you are repaying. Which plan you are on is not a choice, and the difference between them at this salary is £581.55 a year, so it is worth knowing which one your payslip is deducting.
| Plan | Starts at | Repaid a year | A month | Your next £100 |
|---|---|---|---|---|
| Postgraduate Loan | £21,000 | £1,140 | £95 | 34% |
| Plan 5 | £25,000 | £1,350 | £112.50 | 37% |
| Plan 1 | £26,900 | £1,179 | £98.25 | 37% |
| Plan 2 | £29,385 | £955.35 | £79.61 | 37% |
| Plan 4 (Scotland) | £33,795 | £558.45 | £46.54 | 37% |
A postgraduate loan is repaid alongside an undergraduate one rather than instead of it, so someone with both pays both.
One engine behind all eleven
Every calculator on this site runs the same tax engine, and the engine file your browser downloads is byte-identical to the one that generated these pages — a test asserts it, because two implementations of a tax rule is one too many. So the figures here cannot disagree with the salary tables, the hourly pages or any other calculator: they are the same arithmetic asked a different question. The method page sets out how the bands are discovered rather than typed, and sources lists every parameter with the government page and the date it was read from.
Questions people actually ask
What does a £40,000 employee cost?
£45,250 before pension, once £5,250 of employer National Insurance is added. With the 3% auto-enrolment minimum it is £46,450. The employee receives £32,319.60.
What is the employer National Insurance rate?
15% of earnings above the £5,000 secondary threshold for 2026/27, with no upper limit. Unlike employee contributions it does not drop to a lower rate on higher pay.
Can employer National Insurance be reduced?
Legitimately, yes. Salary sacrifice removes the sacrificed amount from earnings entirely, so no employer NI is due on it, and the Employment Allowance offsets a fixed amount for eligible smaller employers. Both are ordinary and intended, not avoidance.
What this calculation assumes
- 2026/27 rates for England, Wales & Northern Ireland.
- One employment, paid through payroll, taxed on the standard code with no adjustments carried in.
- Employment income only — no dividends, savings interest, rental or self-employment income.
- No taxable benefits in kind, no company car, no unpaid leave.
- National Insurance category A: the standard case for an employee over 21 and under State Pension age.
- Income Tax is annual, but National Insurance is charged per pay period — a large one-off bonus can pay more NI than this annual view shows.
- No student or postgraduate loan repayment.
- No salary sacrifice and no workplace pension contribution.