NHS On-Costs Calculator

An employee’s salary is only one part of the amount an NHS employer may need to budget. Employer National Insurance, NHS Pension contributions and other organisational expenses can raise the total cost considerably.

The NHS On-Costs Calculator estimates these additional employment costs separately from the employee’s gross salary. It is intended for workforce planning, vacancy budgeting and comparing the likely annual cost of different posts in England during 2026/27.

This calculator does not estimate an employee’s payslip deductions or take-home income. Those figures can be estimated separately with the NHS Take Home Pay Calculator.

What Does the NHS On-Costs Calculator Include?

The calculator starts with the employee’s annual gross salary and can add:

• Employer National Insurance
• NHS employer pension contributions
• An optional Apprenticeship Levy allocation
• Other employer costs entered as a percentage
• Other fixed annual employment costs

Results include the individual cost components, total annual on-cost, on-cost percentage and overall annual employer cost. Monthly and weekly employer-cost estimates are also provided.

When the starting salary is unknown, the NHS Wage Calculator can be used first to convert hourly or weekly earnings into an annual amount.

How to Calculate NHS Employer On-Costs

Enter the employee’s annual gross salary before employee deductions. The calculator then estimates employer National Insurance using the standard 2026/27 Class 1 rate and annual Secondary Threshold.

Select whether to include the pension contribution paid by the NHS employer. Pensionable pay normally follows the salary figure entered, but the custom option allows a different pensionable amount to be used where appropriate.

Select the Apprenticeship Levy option only when the employer is liable for the levy and has decided to allocate part of that cost to the post. The calculator applies 0.5% to the employee’s salary but cannot determine how an organisation uses its annual levy allowance.

Any additional employment expense can be entered in one of two ways:

• As a percentage of annual gross salary
• As a fixed annual amount

Select Calculate to see the complete estimate. Use Reset before modelling another post or employment-cost scenario.

Worked Example: Employee Earning £35,000

The tested example uses:

• Annual gross salary: £35,000
• NHS employer pension: Included
• Pensionable pay: £35,000
• Apprenticeship Levy allocation: Included
• Other percentage cost: 0%
• Other fixed annual cost: £0

Employer National Insurance

For 2026/27, the standard employer Class 1 National Insurance rate is 15% on earnings above the £5,000 annual Secondary Threshold.

Employer NI:

(£35,000 − £5,000) × 15% = £4,500

NHS Employer Pension Contribution

The calculator applies the direct NHS employer contribution rate of 14.38% to the pensionable salary entered.

£35,000 × 14.38% = £5,033

Apprenticeship Levy Allocation

With the levy option selected, 0.5% of salary is allocated to this post:

£35,000 × 0.5% = £175

Total Annual On-Cost

The additional employer expenses are added together:

£4,500 + £5,033 + £175 = £9,708

The on-cost percentage is:

£9,708 ÷ £35,000 × 100 = 27.74%

Total Employer Cost

Annual salary plus annual on-cost:

£35,000 + £9,708 = £44,708

This produces the following estimates:

• Total annual employer cost: £44,708.00
• Total monthly employer cost: £3,725.67
• Total weekly employer cost: £857.41
• On-cost percentage: 27.74%

The calculator keeps full values during each stage and rounds the displayed figures to the nearest penny.

Understanding the Included Employer Costs

Employer on-costs are expenses paid by the organisation in addition to the employee’s salary. They should not be confused with deductions taken from the employee’s gross pay.

Employer National Insurance

The standard calculation uses a 15% employer National Insurance rate on annual earnings above £5,000. These are the general 2026/27 employer thresholds; special categories, reliefs and employment allowances are not automatically modelled.

The applicable rates and thresholds can be checked in the official GOV.UK employer rates and thresholds guidance.

Employee National Insurance is a different charge. Anyone examining deductions from an employee’s salary should use the NHS Tax and National Insurance Calculator instead.

NHS Employer Pension Contribution

The employer pension estimate uses 14.38%, consisting of the 14.3% employer contribution and the 0.08% administration levy. It is applied to the pensionable annual pay entered in the calculator.

This figure represents the direct contribution used by the calculator. It does not add centrally funded pension support as though it were another amount paid directly by the individual NHS employer.

The employee’s own pension contribution is separate and must not be included as an employer on-cost. The NHS Pension Contribution Calculator is the relevant tool for estimating employee contributions.

Apprenticeship Levy

The Apprenticeship Levy is generally charged at 0.5% of an employer’s annual pay bill, with a £15,000 allowance applied across the organisation.

Because the allowance relates to the employer’s combined pay bill, this calculator cannot decide whether a particular employee creates an additional levy liability. Its levy option is therefore a selectable allocation for budgeting—not a determination of the organisation’s final levy payment.

Other Employer Costs

Actual workforce budgets may include costs that are not covered by the default calculation, such as:

• Training
• Recruitment
• Occupational health
• Uniforms or equipment
• Professional registration support
• Insurance
• Local staffing overheads

These expenses vary between organisations and roles. Add them only when a reasonable figure is available, rather than applying a general percentage without evidence.

Employee-side deductions and net income are covered separately in NHS Salary After Tax, while other workforce and employee-pay tools can be found on the NHS Salary Calculators homepage.

Common Mistakes to Avoid

Do not subtract employer on-costs from an employee’s salary. These costs sit above gross pay and are normally paid by the employer.

Avoid entering the employee’s pension contribution as the employer pension rate. They are separate contributions with different rates and purposes.

The Apprenticeship Levy should not be applied automatically to every post. Check whether the organisation is liable and how it allocates the cost.

Finally, do not assume that the result represents the organisation’s entire cost of employing someone. Local overheads, recruitment expenses and role-specific costs may need to be added separately.

FAQs

Q1: What are NHS employer on-costs?
A: They are employment expenses paid in addition to gross salary, such as employer National Insurance, NHS employer pension contributions and other applicable organisational costs.

Q2: Does the calculator include employee Income Tax?
A: No. Income Tax, employee National Insurance and employee pension contributions are payslip deductions, not employer on-costs.

Q3: What NHS employer pension rate does the calculator use?
A: It uses a direct employer contribution of 14.38% for 2026/27 and applies it to the pensionable annual pay entered.

Q4: Can I enter pensionable pay that differs from gross salary?
A: Yes. Select the custom pensionable-pay option and enter the applicable annual amount. It cannot be higher than the gross salary in this calculator.

Q5: Is the Apprenticeship Levy always included?
A: No. It is optional because liability and the £15,000 allowance are assessed across the employer’s total pay bill rather than one employee.

Q6: Can the calculator include local employment expenses?
A: Yes. Use the additional percentage or fixed annual cost fields when the employer has a suitable figure for the expense.

Q7: Why might the employer’s actual cost differ?
A: National Insurance categories, pensionable-pay rules, levy arrangements, local overheads and payroll treatment can all change the final cost.