Employer NI 2026/27: The £5,000 Secondary Threshold and 15% Rate Explained

Employer National Insurance for 2026/27 is charged at 15% on employee earnings above the £5,000 secondary threshold. The Employment Allowance, which offsets employer NI for eligible employers, increased to £10,500 from April 2025. These changes significantly affect the employment cost for small and medium businesses across Scotland and the wider UK.

Key employer NI figures for 2026/27

• Employer NI rate: 15% on earnings above the secondary threshold.

• Secondary threshold: £5,000 per year (£96.15 per week).

• Employment Allowance: £10,500 per year (for eligible employers).

• The £100,000 employer NI eligibility cap removed from April 2025.

How the Employment Allowance works

The Employment Allowance reduces the employer NI bill by up to £10,500 per year. It is claimed through the payroll software RTI submission. The allowance cannot be used by companies where the sole employee is also a director and no other employees are paid above the secondary threshold. Employers who become eligible because of headcount changes should ensure the claim is made at the start of the tax year.

The cost per employee

An employee paid £30,000 per year generates employer NI of 15% × (£30,000 − £5,000) = £3,750. Before the Employment Allowance, that is the annual NI cost to the employer. For a business with four such employees the total employer NI before allowance is £15,000, reduced to £4,500 after the £10,500 Employment Allowance. Employers need to build this cost into salary offers and business planning.

Employer NI and director remuneration

For a sole director company where Employment Allowance is not available, salary above the £5,000 secondary threshold immediately attracts employer NI at 15%. This is one reason why many sole director companies set their director salary at or near the secondary threshold, with the balance extracted as dividends. The optimal salary level for 2026/27 should be reviewed for each company as the thresholds may have shifted since the last review.

Auto-enrolment and NI planning

Auto-enrolment pension contributions add to employer on-cost. Combining the 15% employer NI, auto-enrolment minimum of 3% of qualifying earnings, and any other benefits means the true cost of employment is materially above the salary figure. New employers should model the full on-cost before committing to a headcount increase.

Countify's payroll management service in Glasgow handles employer NI calculations, RTI submissions, and Employment Allowance claims for businesses across Scotland.