The true cost of employing someone
The additional costs to factor in above someone’s gross salary
The salary you agree is not the cost you pay. As a rule of thumb, budget 15% to 20% on top of gross salary before overheads.
On top of gross salary
- Employer National Insurance contributions: 15% on earnings above £5,000 per year
- Pension: a minimum 3% employer contribution on qualifying earnings under auto-enrolment
- Holiday and sickness cover, plus equipment, software and workspace
The Employment Allowance
Hiring your first non-director employee usually unlocks the Employment Allowance, which removes up to £10,500 of Employer National Insurance per year (sole-director companies cannot claim it). It also changes your own optimal director’s salary, so we recalculate your remuneration when you hire.
💡 Good to know: A £30,000 salary costs roughly £3,750 in Employer National Insurance contributions and around £700 in pension before the allowance: call it £34,500 before overheads.
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