True cost of a hire.
Salary is about two thirds of it. This adds employer National Insurance at 15 per cent, the automatic enrolment pension minimum, equipment, recruitment and ramp-up — then works out the revenue the hire has to cover at your gross margin.
What it really costs.
“Can I afford £30,000?” is the wrong question.
It is the one most owners ask, and it is wrong twice over. The salary is not the cost, and the cost is not the test. The cost includes employer National Insurance, the pension you are legally required to contribute, a laptop and a phone and a licence for everything they need to log into, whatever it takes to find them, and several weeks at the start where you are paying full price for partial output. The test is whether the business can generate enough gross profit to cover all of that and still be better off.
The statutory costs, and where they come from
Two lines in this calculator are not estimates. They are set by law, and both are 2026/27 figures applying from 6 April 2026.
- Employer National Insurance is charged at 15 per cent of earnings above the secondary threshold of £5,000 a year, for a standard category A employee. Source: GOV.UK, rates and thresholds for employers 2026/27. Some categories — apprentices under 25, employees under 21, qualifying veterans and freeport or investment zone employees — attract 0 per cent up to much higher thresholds. This calculator uses the standard rate, so it will overstate the cost for those.
- The employer pension contribution under automatic enrolment is a minimum of 3 per cent of qualifying earnings, within a total minimum of 8 per cent. Qualifying earnings for 2026/27 are the slice between £6,240 and £50,270 a year, and the earnings trigger for automatic enrolment is £10,000. Sources: GOV.UK on workplace pension contributions and the DWP review of the 2026/27 earnings trigger and qualifying earnings band, which held the thresholds at their previous levels.
The Employment Allowance is £10,500 for 2026/27. It is an allowance for the whole business for the whole tax year, not one per employee, so the tick box only helps if your existing payroll has not already absorbed it. A company whose only employee paid above the secondary threshold is a single director cannot claim it at all. If your own pension scheme contributes more than the minimum, or calculates on full salary rather than the qualifying earnings band, put the difference in the other annual costs box.
The ramp-up line, which most calculators skip
A new person is paid in full from day one and productive in full some time later. The tool takes your annual employment cost, takes the fraction of the year the ramp-up period represents, and charges the share of it that does not produce output. Twelve weeks at 50 per cent output on a £36,263 employment cost is twelve fifty-seconds of that figure — £8,368 — of which half, £4,184, is cost against nothing. It is a rough instrument and it is deliberately conservative, but leaving it out is how first-year hiring budgets end up thousands of pounds short.
A worked example
The defaults are illustrative. A £30,000 salary attracts employer NI of 15 per cent on the £25,000 above the £5,000 threshold, which is £3,750. Qualifying earnings are £30,000 capped at £50,270, less £6,240, giving £23,760; 3 per cent of that is £712.80. Add £1,800 of other annual costs and the annual employment cost is £36,262.80 — 20.9 per cent above the headline salary.
Then the one-offs. £1,500 of equipment, £2,500 of recruitment, and twelve weeks at 50 per cent output costing £4,184. First-year total: £44,447, which is 1.48 times the advertised salary. At a 45 per cent gross margin that hire has to be associated with £98,771 of revenue in year one and £80,584 every year after — £6,715 a month, every month, before the business is any better off for having made the appointment.
That is the number to sit with. Not £30,000, and not £36,263. £6,715 a month of additional revenue, or the equivalent in owner hours released and actually used on something that produces it.
The assumptions, stated plainly
- Employer NI is calculated at the standard category A rate. Apprentices, under-21s, veterans and freeport employees attract lower employer NI and the tool does not model them.
- The pension line is the statutory minimum on the qualifying earnings band. Many schemes are more generous, and some calculate on full pay.
- Apprenticeship Levy is not included, since it applies to employers with an annual pay bill over £3 million.
- The revenue figure is gross-margin coverage, not a profit forecast. It tells you what the hire must be worth to stand still, not what it will earn.
- None of this is tax advice, and payroll categories have edge cases. Check the specific case with your accountant before you commit to a salary.
- Nothing you type leaves your browser. There is no database behind this page.
The judgement side of this — whether to hire at all, who to hire first, and the four cheaper things to try before you do — is in the when to hire and who to hire first guide.
Questions about this tool.
What is employer National Insurance in 2026/27?
For a standard category A employee, employers pay 15 per cent on everything the employee earns above the secondary threshold of £5,000 a year, which GOV.UK publishes as £417 a month or £96 a week. On a £30,000 salary that is 15 per cent of £25,000, or £3,750. The figures apply from 6 April 2026 and come from the GOV.UK rates and thresholds guidance for employers. Reduced rates apply to apprentices under 25, employees under 21, qualifying veterans and freeport or investment zone employees, and this calculator does not model those — it will overstate the cost if your hire falls into one.
How much pension does an employer have to pay?
The minimum employer contribution under automatic enrolment is 3 per cent of qualifying earnings, inside a total minimum of 8 per cent once the employee’s own contribution is counted. Qualifying earnings are not the whole salary: they are the slice between £6,240 and £50,270 a year for 2026/27, both held at their previous levels by the DWP. So on a £30,000 salary the employer minimum is 3 per cent of £23,760, which is £712.80 a year. If your scheme contributes more than the minimum, or calculates on full pay, add the difference to other annual costs.
Should I tick the Employment Allowance box?
Only if your existing payroll has not already used it up. The allowance is £10,500 for 2026/27 and it applies once to the whole business for the whole tax year, not once per employee. A business with an existing team will typically have absorbed all of it already, in which case this hire carries the full employer NI bill and the box should stay unticked. A company whose only employee paid above the secondary threshold is a sole director cannot claim it at all. If you are unsure, leave it unticked — the answer is then conservative rather than optimistic.
Why include ramp-up as a cost?
Because you pay it. The person is on full salary from their first morning and producing a fraction of what they will produce in month six. Whatever that gap is, the business funds it, and it is real money even though it never appears as a line in the accounts. Twelve weeks at half output on a £36,263 employment cost is about £4,184. Leaving it out is the single most common reason a hiring budget is short in the first year. If the role is genuinely plug-and-play, set the weeks low rather than pretending the effect does not exist.
What if the role does not generate revenue?
Then it has to release owner hours that do, and the arithmetic just moves. An administrator who frees twelve hours a week is only worth it if you know what those twelve hours will be used for, and if what they are used for produces more than the role costs. Write that down before you advertise: which hours, doing what, worth what. The owner time audit puts a number on the hours side. If you cannot name what you will stop doing, the hire will make you busier rather than freer.
Is the revenue figure a target for that person?
Not usually, and treating it as one causes arguments. It is what the business needs to generate in additional revenue to be no worse off for having made the appointment — the standing-still number. In a business where roles are interdependent it cannot fairly be attributed to one person’s activity. Use it as the test you apply before hiring, not as a quota you apply afterwards. If you cannot see where £6,715 a month of additional revenue would come from, that is a reason to look at the four cheaper alternatives first.
Are these figures right for Northern Ireland and Scotland?
Employer National Insurance and automatic enrolment are UK-wide, so the two statutory lines are the same in Belfast, Glasgow, Cardiff and London. What differs is income tax on the employee’s side in Scotland, which changes what they take home but not what you pay as an employer. Employment law differs in Northern Ireland in ways that matter to notice, redundancy and tribunal exposure rather than to this arithmetic. Nothing here is tax advice — check the specific case with your accountant before you commit.
Want the hiring cost checklist?
We will send you the full checklist: everything that belongs in a first-year hiring budget, the four cheaper alternatives to test before you advertise, and the 90-day outcomes to write down before you interview anyone.
Want a second opinion on the number?
A 30-minute discovery call. We will tell you honestly whether coaching is the right next step for where the business is.
Book a Discovery Call
