Summary:
- Headline NIC rates hold steady for 2026/27, but three changes need attention. The Lower Earnings Limit rises to £6,708 a year and must be configured correctly in payroll software.
- The Employment Rights Act 2025 makes Statutory Sick Pay payable from day one and removes the earnings floor for eligibility. And the full-year cost of the April 2025 rate rise is now fully embedded in workforce budgets.
- Employers who have not re-modelled total employment cost since 2024/25 risk carrying unplanned exposure into the year ahead.
Quick answer: For 2026/27, employer NICs remain at 15% on earnings above £5,000 per year. The LEL rises to £6,708 annually (£559 per month) from 6 April 2026. Employment Allowance stays at £10,500 with no eligibility cap. These figures remain unchanged from 2025/26, except for the LEL uplift. However, employers still need to verify system configurations, recalculate workforce cost models, and act on the ERA 2025 SSP reforms that took effect on the same date.
For the current tax year, employer National Insurance brings no headline rate shock, but that is exactly where complacency sets in. The 15% employer National Insurance Contributions (NICs) rate and the £5,000 Secondary Threshold are now embedded as the new normal, and most businesses are only now experiencing the first full annual budget cycle at these levels. Alongside a revised Lower Earnings Limit (LEL), day-one Statutory Sick Pay (SSP) entitlement under the Employment Rights Act 2025 (ERA 2025), and a salary sacrifice change on the horizon, there is more to action than a simple software update.
2026/27 Employer NIC Rate and Threshold Summary
All figures below are taken directly from HMRC’s Rates and Thresholds for Employers 2026 to 2027, published 30 January 2026 and last updated 7 April 2026.
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Employer National Insurance rates and thresholds: 2025/26 vs 2026/27
| Threshold / Rate | 2025/26 | 2026/27 | Change |
|---|---|---|---|
| Employer NIC rate (Class 1) | 15% | 15% | None |
| Secondary Threshold (annual) | £5,000 | £5,000 | None |
| Secondary Threshold (weekly) | £96 | £96 | None |
| Secondary Threshold (monthly) | £417 | £417 | None |
| Lower Earnings Limit (annual) | £6,396 | £6,708 | +£312 |
| Lower Earnings Limit (monthly) | £533 | £559 | +£26 |
| Lower Earnings Limit (weekly) | £123 | £129 | +£6 |
| Upper Earnings Limit (annual) | £50,270 | £50,270 | None |
| Upper Secondary Threshold (under 21) | £50,270 | £50,270 | None |
| Apprentice Upper Secondary Threshold | £50,270 | £50,270 | None |
| Veterans Upper Secondary Threshold | £50,270 | £50,270 | None |
| Employment Allowance | £10,500 | £10,500 | None |
| Class 1A and 1B rate | 15% | 15% | None |
Source: HMRC, Rates and Thresholds for Employers 2026 to 2027.
The primary (employee) NIC rate also remains unchanged: 8% on earnings between the Primary Threshold (£12,570) and the Upper Earnings Limit (£50,270), and 2% on earnings above that.
How Employer NICs Are Calculated
Employer Class 1 NICs apply at 15% on each employee’s gross earnings above the Secondary Threshold of £5,000 per year. There is no upper earnings limit for the employer. The 15% rate applies to all earnings above £5,000 regardless of how high the salary goes.
The formula:
Employer NIC = (Annual Earnings − £5,000) × 15%
For a monthly-paid employee, apply the monthly secondary threshold of £417.
One practical point worth flagging: where an employee has multiple jobs, each employer calculates NIC independently based on what they pay. There is no aggregation across employments for employer contributions.
What Has Changed from 2025/26?
The honest answer is: very little on the face of it. Rates and most thresholds are frozen. The one meaningful change is the LEL increase, driven by the September 2025 Consumer Price Index (CPI) rate of 3.8%, which HMRC used to uprate the LEL from £6,396 to £6,708 per year.
Why does this matter in practice? The LEL determines two things: whether an employee builds a qualifying year for State Pension purposes (you earn at or above the LEL but below the Primary Threshold), and whether employees qualify for certain statutory payments. SSP eligibility has changed separately under the ERA 2025 (covered below), but the LEL still feeds into pension auto-enrolment qualifying earnings calculations and year-to-date NIC records. An incorrect LEL in your payroll software produces discrepancies in employee pension records, the kind of error that surfaces at year-end and requires a corrective Full Payment Submission (FPS) to HMRC.
The bigger story for 2026/27 is that this is the first full financial year where most businesses are budgeting with the higher employer NIC rate and lower Secondary Threshold embedded across twelve months. The rate change happened in April 2025, but many businesses entered 2025/26 mid-planning cycle and only absorbed the partial-year cost. The full-year impact is now visible in workforce budgets, and for organisations that have not revisited their cost modelling, the numbers may surprise.
Employer Cost Modelling at Key Salary Levels
The table below shows annual employer NIC liability at common salary levels under the 2026/27 rates (15% above £5,000), before applying Employment Allowance.
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Annual employer NIC liability by salary level (2026/27, before Employment Allowance)
| Annual Salary | Employer NIC | NIC as % of Salary |
|---|---|---|
| £12,570 (NMW full-time, age 21+) | £1,136 | 9.0% |
| £20,000 | £2,250 | 11.3% |
| £25,000 | £3,000 | 12.0% |
| £30,000 | £3,750 | 12.5% |
| £36,036 (UK average earnings) | £4,655 | 12.9% |
| £50,000 | £6,750 | 13.5% |
| £70,000 | £9,750 | 13.9% |
| £100,000 | £14,250 | 14.3% |
Employer NIC charged at 15% on earnings above the £5,000 Secondary Threshold. Source: HMRC.
Employer NIC charged at 15% on earnings above the £5,000 Secondary Threshold. Source: HMRC.
For an employee on average UK earnings of £36,036, the Deloitte analysis of the original Budget measure showed the combined effect of the rate rise and threshold reduction increased employer contributions from £3,715 in 2024/25 to £4,655 in 2025/26, a 25% increase that carries forward unchanged into 2026/27.
For a team of 50 employees averaging £36,036, the annual employer NIC bill is approximately £232,750. Multiply that across different headcount or salary mix scenarios to understand the budget exposure.
One variable worth modelling separately: the NMW increase to £12.71 per hour from 1 April 2026 (for workers aged 21 and above) pushes more employees into higher NIC bands, even where salaries have not been increased by discretion.
Most employees fall under category letter A, the standard rate. Certain employee groups attract a zero employer NIC rate up to the relevant upper threshold, which significantly reduces the cost of employing them.
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Employer NIC by category letter (2026/27)
| Category | Description | Employer NIC above Secondary Threshold, up to Upper Secondary Threshold |
|---|---|---|
| A | Standard employee | 15% |
| H | Apprentice under 25 | 0% up to £50,270, then 15% |
| M | Employee under 21 | 0% up to £50,270, then 15% |
| V | Veteran (first year of civilian employment) | 0% up to £50,270, then 15% |
Fiscal Drag and the Hidden Cost Pressure
The income tax thresholds and the NIC Primary Threshold remain frozen until 2030/31 at £12,570. With wages rising, more employees move into higher tax bands each year, a mechanism described as fiscal drag. The government collects additional revenue without changing headline rates.
For employers, fiscal drag has a secondary effect. As employees’ real take-home pay shrinks relative to wage growth, pressure for salary increases builds. An employee who received a 4% pay rise in 2025/26 may have seen their effective tax rate increase at the same time, eroding part of that uplift. This feeds into compensation conversations, retention risk, and total reward strategy, particularly for HR directors managing cost alongside engagement.
The frozen Secondary Threshold adds a further layer. At £5,000, it is now well below minimum wage for any full-time worker. Every employee on a standard contract generates employer NICs from their first hour of work above this level. The threshold has not moved since April 2025 and will not move until at least 2030/31.
Key Takeaway
The 2026/27 NIC landscape is stable in rate terms, but that stability masks three real action points: the LEL update that must land correctly in your payroll system, the ERA 2025 SSP reforms that change who qualifies and when payments start, and the accumulated full-year cost burden from the April 2025 rate change that is now fully embedded in workforce budgets. Any employer who has not recalculated total employment costs since 2024/25 is likely carrying unplanned exposure.
Recommended next action: Run a cost-per-head model across your current headcount using the 2026/27 figures, then compare against your 2024/25 baseline. The delta will inform both headcount planning and compensation review cycles for the year ahead.
For employers managing payroll across multiple countries alongside UK obligations, TopSource’s global payroll services and Employer of Record solutions can simplify compliance across jurisdictions, including the statutory reporting and RTI obligations that sit alongside HMRC’s UK requirements. If you are expanding internationally or need support with multi-territory payroll, speak with our team.
