Running Payroll in 2026/27: Employer NI at 15%, the £10,500 Employment Allowance, and Staying Compliant

Payroll looks simple - pay people, deduct tax - until you're the one responsible for it. Get it wrong and you face HMRC penalties, pension-regulator letters and unhappy staff, all at once. Here's what employing people actually costs and requires in 2026/27.

What employing someone really costs

On top of gross salary, employers pay 15% National Insurance on each employee's earnings above £5,000 a year - the higher rate and much lower threshold introduced in April 2025 both continue this year. Add pension contributions (below) and a £30,000 salary genuinely costs around £34,500 before you've paid for a single day of holiday cover.

The good news is the Employment Allowance: eligible employers can cut up to £10,500 off their employer NI bill each year - and the old £100,000 eligibility cap has been removed, so almost all small and medium employers now qualify. One important exception: a company whose only person paid above the threshold is its sole director can't claim it. If you employ anyone at all, check this - it's the single easiest payroll saving there is, and we check every client's eligibility and claim it where due.

The rules you can't skip

·      Register before the first payday. A limited company must register as an employer with HMRC even if the only person it pays is you as director.

·      Report in real time. Under RTI (Real Time Information), a Full Payment Submission must reach HMRC on or before every payday - not monthly in arrears, not "when we get round to it". Every single pay run.

·      Payslips are a legal right. Every employee gets one, every payday, showing pay and deductions.

·      P60s by 31 May. Every employee still with you on 5 April must receive their P60 by the end of May.

·      Statutory payments. Sick pay, maternity and paternity pay have their own rates and eligibility rules - applying them wrongly is one of the most common payroll errors we untangle for new clients.

Pensions: auto-enrolment never stops

Every employer must assess staff for a workplace pension, enrol those who qualify, and contribute at least 3% of qualifying earnings - a band of earnings set by government each year - with 8% going in overall, including the employee's share. It isn't a one-off task: new starters must be assessed, opted-out staff must be re-enrolled roughly every three years, and declarations filed with The Pensions Regulator. This is precisely the sort of quiet, recurring obligation that an outsourced payroll simply absorbs.

Construction? CIS runs alongside payroll

If you're a contractor in construction, the Construction Industry Scheme adds monthly CIS returns and subcontractor deductions on top of PAYE. We run both together, so there's far less risk of anything falling between the two. CIS service

What outsourcing actually looks like

Clients send us starters, leavers and hours; we do everything else - payslips, RTI submissions, pension assessments and uploads, statutory payments, P60s, and the answers when HMRC writes. Payroll for a small team typically costs less per month than one hour of your own time spent wrestling with it. [LINK: Payroll service page]

Curious what a salary is worth after deductions? Try our free take-home pay calculator.

Frequently asked questions

How much is employer National Insurance in 2026/27? Employers pay 15% National Insurance on each employee's earnings above £5,000 a year. The rate and threshold are unchanged from April 2025.

What is the Employment Allowance for 2026/27? Eligible employers can knock up to £10,500 off their employer National Insurance bill for the year, and the old £100,000 eligibility cap has been removed. Companies where a sole director is the only employee paid above the threshold are not eligible.

When do I have to report payroll to HMRC? Under Real Time Information (RTI), you must send HMRC a Full Payment Submission on or before every payday - weekly or monthly, every single time you pay staff.

Do I have to register as an employer if I only pay myself? Yes - a limited company must register as an employer before its first payday even if the only person on the payroll is you as director.

Our payroll service runs PAYE end to end.

We work with a lot of hospitality employers - see accountants for restaurants and hospitality.

Healthcare employers have their own quirks - see accountants for doctors and healthcare.