£10,500 off your employer NI bill
0.5% of pay bill if over £3M
Reg. 07380272 · England & Wales · Est. 2010
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Total Payroll Cost
£30,900.00
Avg Cost Per Employee
£30,900.00
Employment Allowance Saving
£3,750.00
Payroll Breakdown
| Name | Gross | PAYE | Emp NI | Pension | Net Pay | Er NI | Er Pension | Total Cost |
|---|---|---|---|---|---|---|---|---|
| Employee 1 | £30,000.00 | £3,486.00 | £1,394.40 | £1,500.00 | £23,619.60 | £3,750.00 | £900.00 | £34,650.00 |
| Totals | £30,000.00 | £3,486.00 | £1,394.40 | £1,500.00 | £23,619.60 | £3,750.00 | £900.00 | £30,900.00 |
Everything you need to know about UK payroll costs
What is included in the total payroll cost?
Total payroll cost includes gross salaries, employer National Insurance contributions (after Employment Allowance), employer pension contributions, and Apprenticeship Levy if applicable.
What is the Employment Allowance?
A £10,500 annual reduction in your employer NI bill. Most businesses qualify unless the sole employee is also a director, or if your previous year's employer NI was over £100,000.
What pension contributions are required?
Under auto-enrolment, employers must contribute at least 3% and employees at least 5% of qualifying earnings, totalling a minimum 8%.
How is PAYE calculated?
PAYE (Pay As You Earn) is the income tax deducted from each employee's salary based on their tax code. This calculator uses the standard Personal Allowance of £12,570.
HMRC-Aligned: This calculator uses official 2025/26 tax bands, National Insurance thresholds, and pension auto-enrolment rules. Actual payroll costs may vary depending on individual tax codes, student loan deductions, and other adjustments. Consult your payroll provider for exact figures.
This calculator uses official rates and thresholds from:
Last verified: February 2026 · Tax year 2025/26. Results are indicative — consult a qualified accountant for personalised advice.
How PAYE works, what gets deducted from your pay, and what employers must do
What is PAYE and how does it work?
PAYE stands for Pay As You Earn. It is the system HMRC uses to collect income tax and National Insurance from employees' wages before they are paid. Your employer works out how much to deduct each pay day using your tax code and NI category. On a £30,000 salary, roughly £3,486 goes to income tax and £2,084 to National Insurance each year through PAYE.
What is a tax code and why does it matter?
Your tax code tells your employer how much tax-free income you get before tax kicks in. The most common code is 1257L, which means you can earn £12,570 tax-free in 2025/26. If your code is wrong, you could be paying too much or too little tax each month. Check your tax code on your payslip or HMRC online account and contact HMRC if it looks wrong.
What National Insurance do employees pay?
Employees pay Class 1 National Insurance at 8% on earnings between £12,570 and £50,270 per year, and 2% on anything above £50,270. Your employer also pays 15% NI on your earnings above £5,000 (the secondary threshold). On a £35,000 salary, you pay about £1,794 in employee NI, while your employer pays £4,515 on top.
What appears on a UK payslip?
Your payslip must show your gross pay, income tax deducted, National Insurance deducted, any pension contributions, student loan repayments if applicable, and your net (take-home) pay. It should also list your tax code and NI number. Employers must give you a payslip on or before each pay day, either on paper or electronically.
When does an employer need to run payroll?
Any business that pays employees must register as an employer with HMRC and run payroll. This applies even if you only have one employee. You must report pay and deductions to HMRC on or before each pay day using Real Time Information (RTI). Late or incorrect RTI submissions can result in penalties starting at £100 per month.
What is auto-enrolment for pensions?
By law, employers must enrol eligible workers into a workplace pension scheme. You qualify if you are aged 22 to state pension age and earn over £10,000 a year. The minimum contributions are 8% of qualifying earnings — at least 3% from your employer and 5% from you. On a £28,000 salary, qualifying earnings are £15,430, so minimum contributions total £1,234 per year.
How are student loan repayments handled through payroll?
If you have a student loan, your employer deducts repayments through PAYE once you earn above the threshold. For Plan 2 (post-2012 loans), the threshold is £27,295 and you repay 9% of earnings above that. On a £32,000 salary, your monthly repayment would be about £35. HMRC tells your employer to start deducting via your tax code.
What is a P60 and when do you get one?
A P60 is a yearly summary your employer must give you by 31 May after the tax year ends. It shows your total pay, tax and NI deducted, and pension contributions for the year. You need it to file a Self Assessment return, apply for a mortgage, or check your tax is correct. Keep it safe — you cannot get a replacement from your employer, though the data is on your HMRC online account.
HMRC-Aligned: Based on 2025/26 HMRC rates and thresholds. For personal advice, speak to a qualified accountant or tax adviser.
Reviewed by M. Samiuddin Quadri, ACCA — Chartered Certified Accountant at Gladstone & Co. · Updated for the 2025/26 tax year.
Disclaimer: This calculator provides estimates based on current HMRC rates and thresholds for the 2025/26 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant or tax adviser before making financial decisions. Read our terms