Employer National Insurance

Employer National Insurance is a tax your employer pays on top of your salary. In 2026/27 it is 15 per cent of everything you earn above £5,000 a year (£417 a month or £96 a week). It never comes out of your pay, but it adds roughly £4,000 to the cost of employing a full-time NHS band 5 nurse, and it shapes how much money there is for pay, staffing and schemes like salary sacrifice.

How it is worked out

Each employer calculates its contribution per employee, per pay period. For most staff, category A on the payslip, the rules are:

Threshold	Monthly	Annual	Employer rate
Up to the secondary threshold	£417	£5,000	0%
Above the secondary threshold	over £417	over £5,000	15%

There is no upper limit for employers. Employees pay 8 per cent between £12,570 and £50,270 and then 2 per cent above that, but the employer’s 15 per cent carries on at the same rate however high the salary goes. Taxable benefits such as some lease cars are charged at the same 15 per cent through Class 1A.

Three groups have a different employer rate. For staff under 21 (category M), apprentices under 25 (category H) and eligible veterans in their first civilian job (category V), the employer pays 0 per cent up to £50,270 a year, and 15 per cent above. The letter on your payslip tells you which category payroll is using. National Insurance category letters explains each one.

What it costs on typical public sector salaries

These are hypothetical full-time examples using 2026/27 rates.

An NHS band 5 nurse in England on the entry point of £32,073: the trust pays 15 per cent of £27,073, which is £4,060.95 in employer National Insurance. On top of that it pays 14.38 per cent employer pension contribution directly (£4,612.10), and NHS England pays a further 9.4 per cent centrally.

A newly qualified teacher on M1 outside London, £34,069 from September 2026: employer National Insurance is £4,360.35 a year. The school also pays the Teachers’ Pension Scheme employer rate of 28.68 per cent, which is £9,770.99.

So the real cost of a public sector post is well above the advertised salary. Employer National Insurance and employer pension together often add a third or more.

Why it matters if you are the employee

You never pay it, so it is easy to ignore. It still affects you in a few ways.

Pay awards cost more than the headline. A 3.3 per cent rise on a salary also raises the employer’s National Insurance and pension bill. When departments, trusts and councils budget for a pay award, they cost all three together, which is part of why awards are argued over so hard.

It is a reason employers offer salary sacrifice. When you give up part of your gross pay in exchange for a benefit, such as a bike or an electric car, your employer saves 15 per cent of the amount sacrificed as well as your own tax and National Insurance falling. Some employers share that saving with staff. Salary sacrifice schemes covers how this works and where it can hurt, for example by lowering pay used for pension or mortgage purposes.

It affects the cost of agency and bank staff. Bank workers employed by a trust attract employer National Insurance in the same way as substantive staff. Agency workers are paid through the agency, which builds its own employer costs into the charge.

It can affect hiring decisions. Because employer costs are lower for under-21s and apprentices under 25 up to £50,270, an apprenticeship can be cheaper for an employer than an equivalent standard post. That is one reason public bodies run large apprenticeship programmes. Apprenticeships in the public sector lists the main ones.

The Employment Allowance and the Apprenticeship Levy

Smaller employers can claim the Employment Allowance, which reduces their employer National Insurance bill by up to £10,500 a year. Not every employer can claim it, and public bodies are generally excluded, so most NHS trusts, councils and government departments pay in full. A GP practice, a small academy trust or a charity running public services may be able to claim it.

The Apprenticeship Levy is a separate charge of 0.5 per cent of an employer’s pay bill, with a £15,000 annual allowance against it, so only employers with a pay bill above £3 million pay anything. Large NHS trusts, councils and multi-academy trusts pay it and draw the money back to fund apprenticeship training.

Where to see it

Employer National Insurance is not a deduction from your pay, so it does not appear among the deductions on your payslip. Your P60 shows only your own contributions. If you want to know the full cost of your post, finance or HR can usually tell you, and job evaluation or budget papers sometimes show it.

For your own deductions, the take-home pay calculator shows employee National Insurance, Income Tax and pension for any salary.