True Cost to Employ Someone on £45,000
Mid-level · HMRC 2025-26 & 2026-27 · updated for 15% employer NI from 6 April 2025
Quick answer
£46,163 (small employer, 2025-26)
Effective overhead on top of salary: 15.9%
The true cost to a UK employer of a £45,000 salary is about £46,163 in 2025-26 (small employer, Employment Allowance applied): salary £45,000 + £6,000 employer NI (15% over £5,000) + £1,163 auto-enrolment pension (3% on £6,240–£50,270 qualifying earnings) − £6,000 Employment Allowance = £46,163. Effective overhead rate: 15.9%.
Breakdown: small employer (Employment Allowance applied)
| Line item | 2025-26 | 2026-27 |
|---|---|---|
| Gross salary | £45,000 | £45,000 |
| + Employer NI (15% over £5,000) | £6,000 | £6,000 |
| + Auto-enrolment pension (3% on £6,240–£50,270) | £1,163 | £1,163 |
| − Employment Allowance offset (up to £10,500) | −£6,000 | −£6,000 |
| True cost per employee | £46,163 | £46,163 |
Large employer: add the Apprenticeship Levy
If your annual UK pay bill is over £3 million, HMRC charges a 0.5% Apprenticeship Levy on the whole payroll (minus a £15,000 allowance). For a headcount of 100 staff each on £45,000 (total payroll £4,500,000), that works out to about £75 per employee per year on top of the employer NI and pension. Large employers are also typically not eligible for the £10,500 Employment Allowance.
Compare with other salary bands
Want different assumptions?
The numbers above use a 3% minimum auto-enrolment pension on qualifying earnings only. Raise the pension rate, change headcount, or toggle Employment Allowance / Apprenticeship Levy on the interactive Employer Cost Calculator.
Frequently asked questions
What is the true cost of a £45,000 salary to a UK employer?
For 2025-26, a £45,000 salary costs a small UK employer about £46,163 per year, rising to £46,163 in 2026-27. That includes £6,000 in Class 1 employer NI (15% over the £5,000 secondary threshold), £1,163 in minimum 3% auto-enrolment pension on qualifying earnings (£6,240–£50,270), offset by £6,000 of the £10,500 Employment Allowance if eligible.
How is employer National Insurance calculated on £45,000?
HMRC Class 1 secondary (employer) NI is 15% on earnings above the £5,000 secondary threshold (both 2025-26 and 2026-27). For £45,000, that's 15% × £40,000 = £6,000 per year before any Employment Allowance offset.
Does every employer pay the Apprenticeship Levy on £45,000?
No — only employers with an annual pay bill over £3 million pay the 0.5% Apprenticeship Levy, and the first £15,000 is offset by the Levy Allowance. A small business paying one person £45,000 is well below the threshold and pays nothing. A large employer with 100+ staff on £45,000 would pay roughly £75 per employee per year.
Can Employment Allowance reduce the cost of hiring on £45,000?
Yes — eligible small employers can offset up to £10,500 of Class 1 employer NI per tax year (2025-26 and 2026-27). On a £45,000 salary that offset is worth £6,000. Employment Allowance is only available to businesses whose employer NI bill in the previous tax year was under £100,000.
What does the true cost exclude?
This calculation covers the mandatory HMRC on-costs: employer NI, minimum auto-enrolment pension, and Apprenticeship Levy. It excludes statutory sick pay, maternity/paternity pay, holiday pay (20 days + 8 bank holidays), training, equipment, recruitment agency fees, and any discretionary benefits like private medical insurance or bonuses.
Related Calculators
Total Payroll Cost Calculator
Multi-employee team modelling with mixed salaries, EA eligibility, pension, and Apprenticeship Levy.
Employer NI Calculator
Employer National Insurance contributions and Employment Allowance.
Holiday Pay Calculator
UK statutory holiday entitlement (5.6 weeks), 12.07% accrual for irregular and zero-hours workers, and rolled-up holiday pay.