Article
4 min read
Employer Costs for an Employee in the United Kingdom (2026 Guide)
Employer of record
Global hiring
Author
Jemima Owen-Jones
Last Update
February 04, 2026
Quick answer: What is the total employer cost for a $100,000 salary in the UK?
For an employee earning $100,000 USD annually in the United Kingdom, employers can expect mandatory employer costs of approximately $15,740 USD per year, bringing total compensation costs to $115,740 USD.
Estimated total employer cost (UK): ~15.7% on top of gross salary (example estimate)
Hiring in the United Kingdom can be a great way to access skilled talent—whether you’re expanding into the market, building a remote team, or hiring your ideal candidate locally.
But even when two employees earn the same salary, the total employer cost varies by country due to different statutory contributions, pension requirements, and payroll rules.
This guide provides a ballpark estimate of the mandatory employer cost of hiring an employee in the United Kingdom, using an example salary of $100,000 USD per year.
What’s included in this estimate?
This estimate includes mandatory employer-side statutory costs that may apply when hiring an employee in the UK, such as:
- Employer National Insurance Contributions (NICs)
- Apprenticeship Levy
- Mandatory private workplace pension contributions
What’s not included in this estimate?
This estimate generally does not include additional costs such as:
- Paid annual leave (vacation)
- Sick pay
- Private health insurance
- Employer-provided benefits or allowances
- Bonuses, equity, or commissions
- Equipment and onboarding expenses
- Costs tied to industry requirements or region-specific rules
Why employer costs vary in the UK (and globally)
Employer costs can differ depending on:
- Income thresholds and contribution caps
- Pension contribution requirements
- Industry-specific rules and benefits
- Changes in regulation year to year
- Currency exchange rate fluctuations (if you pay in a different base currency)
Estimated employer cost breakdown for the United Kingdom
Below is an estimated breakdown of mandatory employer costs for hiring an employee in the UK earning $100,000 USD/year.
Example salary used in this estimate
- Annual gross salary: $100,000 USD
- Annual gross salary (approx.): £80,483 GBP
Employer mandatory costs (estimated)
| Employer Cost Category | Estimated Annual Cost (GBP) | Estimated Annual Cost (USD) | Notes |
|---|---|---|---|
| National Insurance Contributions | £9,851 | $12,240 | Employer NICs |
| Apprentice Tax Levy | £402 | $500 | Apprenticeship Levy |
| Mandatory Private Workplace Pension | £2,414 | $3,000 | Employer pension contribution |
| Total Estimated Employer Costs | £12,667 | $15,740 | Total mandatory employer cost estimate |
Total compensation cost (salary + mandatory employer costs)
| Total | GBP | USD |
|---|---|---|
| Gross Salary | £80,483 | $100,000 |
| Mandatory Employer Costs | £12,667 | $15,740 |
| Total Compensation Cost | £93,150 | $115,740 |
Global Hiring Toolkit
Hire in the United Kingdom (and 130+ other countries) with Deel
Hiring internationally introduces a new layer of complexity—local labor laws, payroll rules, statutory benefits, and compliance requirements can add up fast.
Deel helps you hire employees in the United Kingdom and across 130+ countries while handling:
- Local payroll and tax compliance
- Statutory contributions and reporting
- Country-specific benefits administration
- Contracts and onboarding support
- Ongoing compliance as regulations change
With Deel, you can scale your global hiring strategy faster—without building local entities or juggling multiple vendors. Book a demo to learn more.
FAQs
How much does an employee cost beyond salary in the UK?
In UK employment, employers typically pay additional costs on top of gross salary, including employer contributions like National Insurance and contribution under auto enrolment (workplace pension). These mandatory costs can add a meaningful percentage to total compensation.
What is PAYE tax and how does it affect employer costs?
PAYE tax (Pay As You Earn) is the system employers use to withhold income tax and National Insurance from employee wages and report them to HMRC. While income tax is paid by the employee, running PAYE correctly is a legal requirement and impacts payroll setup and compliance.
Do employers pay income tax and National Insurance for employees in the UK?
Employers do not pay the employee’s income tax, but they must withhold it through PAYE. Employers do pay employer National Insurance as an additional cost on top of salary, which increases total employer spend.
What is Real Time Information (RTI) reporting in the UK?
Real Time Information (RTI) is the UK payroll reporting system where employers submit pay and deduction information to HMRC each time employees are paid. RTI is a legal requirement for compliant payroll processing under PAYE.
What does “tax year” mean for UK payroll?
The UK tax year runs from 6 April to 5 April. This matters because thresholds and calculations for income tax, National Insurance, and some employer costs are assessed across the tax year, not the calendar year.
What is the contribution under auto enrolment in the UK?
Auto enrolment is a UK workplace pension requirement. Employers must make a minimum contribution under auto enrolment for eligible employees, which increases the total cost of hiring beyond base salary.
What is Statutory Sick Pay (SSP) in the UK?
Statutory Sick Pay (SSP) is the minimum sick pay employers must provide to eligible employees who are off work due to illness. SSP can increase the real cost of employment, especially when planning for long term absences and workforce coverage.
What is the National Minimum Wage in the UK?
The National Minimum Wage (and National Living Wage, depending on age) sets the lowest legal hourly pay rate in the UK. Employers must meet this minimum as a legal requirement, which can affect hiring budgets for hourly roles.
What is a “pay class” in UK payroll?
A pay class is a way employers group employees in payroll based on how they’re paid (for example, weekly vs monthly) and how deductions are processed. Setting up pay classes correctly supports accurate payroll and compliance reporting.
Are any UK payroll benefits tax free?
Some benefits may be structured as tax free or tax-advantaged depending on UK rules (for example, certain expense reimbursements or approved schemes). These don’t always reduce employer costs directly, but they can improve employee take-home pay and support more efficient compensation planning.
Jemima is a nomadic writer, journalist, and digital marketer with a decade of experience crafting compelling B2B content for a global audience. She is a strong advocate for equal opportunities and is dedicated to shaping the future of work. At Deel, she specializes in thought-leadership content covering global mobility, cross-border compliance, and workplace culture topics.
