What Employers' National Insurance Costs a Care Provider in 2026-27
At 15 percent on almost the whole of every carer's pay, employer National Insurance is now one of the biggest line items in a care business. If it is not built into your fees, it comes straight out of margin. Here is the real number for a 50-carer agency.
For 2026-27, employers pay National Insurance at 15 percent on each employee's pay above the 5,000 pound secondary threshold. On a carer earning 20,000 pounds that is about 2,250 pounds a year, so a 50-carer agency faces roughly 112,500 pounds of employer National Insurance, falling to about 102,000 pounds if it can claim the 10,500 pound Employment Allowance. Every extra carer at that pay adds around 2,250 pounds.
KBy Kris Nick, Account ManagerReviewed and signed off by a senior qualified accountant on the LOYALS team
9 min read
What does employers' National Insurance cost a care provider?
More than most owners realise, because of how the numbers are now set. Employer National Insurance is charged at 15 percent on each employee's pay above a low secondary threshold, and in a care business almost every carer's pay sits above that threshold. So it is not a small top-up on the wage bill, it is a charge on nearly the whole of it, and for a staff-heavy provider that runs into six figures a year.
The reason it deserves its own look is that it is a direct cost of delivering care. Every extra carer, every extra hour, carries employer National Insurance with it. If your council and NHS fee rates were agreed before the rate and threshold changed, or if you have simply never modelled it, the cost is quietly eating margin you cannot see.
This guide is written by LOYALS, a King's Cross firm of accountants and business consultants that runs payroll and management accounts for care providers across London, including through our accountants for care agencies. The aim here is to give you the real figure for a typical agency, show how big a slice of your wage bill it is, and point to the one relief that can bring it down.
The rate and threshold for 2026-27
Two numbers drive the whole thing. For 2026-27, the employer, or secondary, Class 1 National Insurance rate is 15 percent, and the secondary threshold is 5,000 pounds a year, which is 96 pounds a week. You pay the 15 percent on everything an employee earns above that threshold. The rate and threshold are set out in the gov.uk National Insurance contribution rates for employers and the rates and thresholds for employers 2026 to 2027.
The low threshold is the part that hurts a care provider. At 5,000 pounds, it is well below what any carer earns in a year, so almost the entire wage is exposed to the 15 percent. A carer on 20,000 pounds has 15,000 pounds of pay above the threshold, and 15 percent of that is 2,250 pounds of employer National Insurance, on top of the wage itself. That is the unit cost you can then scale across your whole team.
Sizing what a wage really costs? Our free take-home pay calculator breaks down the gross-to-net on a given salary, a useful companion when you are working out the full cost of a role. No signup needed.
The National Insurance bill for a 50-carer agency
Scale the unit cost and the picture is clear. Take an illustrative agency with 50 carers each earning around 20,000 pounds. At 2,250 pounds of employer National Insurance per carer, the total is about 112,500 pounds a year, before any Employment Allowance. That is money the business pays purely for the privilege of employing its team, on top of every pound of wages.
Employer National Insurance for a UK care agency in 2026-27: the bill scales straight with headcount at about 2,250 pounds per carer. Illustration, not client data.
The chart makes the point that this is a linear, unavoidable cost. There is no economy of scale in it: doubling your carers doubles the National Insurance. That is exactly why it has to sit in your fee model and your management accounts as a named cost, not be discovered at the year-end. It also makes every carer's true cost to employ noticeably higher than their headline wage.
Real LOYALS client outcome
LOYALS runs the finance function for a London domiciliary care provider with around forty-five carers. Because employer National Insurance is modelled per carer in their monthly management accounts, the owner can see exactly what each hour of care truly costs once wages, National Insurance and travel time are counted. That number is what they take into council and ICB fee conversations, so a rise in the National Insurance cost is evidenced in the fee negotiation rather than quietly absorbed.
How big a slice of your wage bill it is
Set the National Insurance against the wages it sits on and you can see the weight of it. For the same 50-carer agency, the wage bill is about one million pounds, and the employer National Insurance adds roughly 112,500 pounds on top, taking the total cost of employment past 1.1 million pounds. In other words, for every pound of wages you pay, you carry about 11 pence of employer National Insurance as well.
Employer National Insurance as a share of the wage bill for a UK care agency in 2026-27: about 112,500 pounds of NIC sits on top of a one million pound wage bill. Illustration, not client data.
Want the real number for your own agency? Send me your rough carer headcount and average pay, and whether your fees were set recently, and I will tell you what employer National Insurance is costing you and whether it is priced in. Message Kris on WhatsApp.
The Employment Allowance and whether you can claim it
There is one relief that can take the edge off. The Employment Allowance lets eligible employers reduce their annual employer National Insurance by up to 10,500 pounds. For our 50-carer agency, claiming it would bring the National Insurance bill down from about 112,500 pounds to roughly 102,000 pounds. It is not a huge dent in a six-figure cost, but it is real money and worth claiming where you can.
The catch is eligibility. Employers who do more than half their work of a public nature are generally excluded from the Employment Allowance, and a lot of care work is publicly funded. Whether a given provider qualifies depends on how its work is funded and structured, and providers of personal care to individuals are not automatically excluded, so it is a test to run rather than a yes or no you can assume. The rules are on gov.uk under claiming the Employment Allowance, and we cover the care-sector angle in detail in our guide to the Employment Allowance public sector test for care providers.
The three numbers behind employer National Insurance for a UK care provider in 2026-27: the rate, the allowance and the cost per extra carer. Illustration, not client data.
LOYALS works specifically with domiciliary care, home care and care home businesses, so employer National Insurance is modelled where it belongs: inside the monthly numbers and the cost per care hour, not bolted on at the year-end. You can see the full picture on our care agency accountants page, and the payroll detail on our payroll and PAYE service.
Here is how the three common ways of handling employer National Insurance actually compare:
What you need
DIY / ignore it
Generic accountant
LOYALS care specialist
Shows National Insurance as a named cost per carer
✗ Hidden in wages
● At year-end
✓ Monthly, per carer
Feeds it into your true cost per care hour
✗
●
✓ Built in
Checks whether you can claim the Employment Allowance
✗
● If asked
✓ Tested for you
Gives you the evidence for fee negotiations
✗
✗
✓ In the pack
Open Mon to Sat for a quick cost question
✗
✗ Mon to Fri 9 to 5
✓ 10am to 7pm Mon to Sat
Fixed monthly fee, no surprise invoices
✓
● Hourly billing common
✓ Fixed monthly
This is why care providers move to a specialist who shows National Insurance as a real cost and puts it into the fee conversation.
What this typically costs at LOYALS
Care Payroll and Compliance (payroll, National Insurance and the Employment Allowance handled): from £995 a month
Care Finance Department (payroll, management accounts, cost per care hour and the lender pack): £1,495 to £2,495 a month
All fees exclude VAT and are fixed for twelve months. Quotes are issued in writing within 24 hours after a 15-minute call, and we do not take on ongoing work below £500 a month. See full price list.
Frequently asked questions
How much is employers National Insurance in 2026-27?+
For 2026-27 employers pay Class 1 secondary National Insurance at 15 percent on each employee's pay above the secondary threshold of 5,000 pounds a year. So on a carer earning 20,000 pounds, the employer National Insurance is 15 percent of 15,000 pounds, which is 2,250 pounds. The rate and the low threshold mean National Insurance is now a significant line in any care provider's cost of employing staff.
What does National Insurance cost a 50-carer agency?+
On an illustrative agency with 50 carers each earning around 20,000 pounds, the employer National Insurance is about 2,250 pounds per carer, or roughly 112,500 pounds a year in total before the Employment Allowance. If the agency can claim the Employment Allowance of 10,500 pounds, the bill falls to about 102,000 pounds. Every extra carer at that pay level adds around 2,250 pounds to the annual National Insurance cost.
Can a care provider claim the Employment Allowance?+
Sometimes. The Employment Allowance lets eligible employers cut their annual employer National Insurance by up to 10,500 pounds, but employers who do more than half their work of a public nature are generally excluded. Whether a care provider qualifies turns on how its work is funded and structured, so it needs checking rather than assuming. Providers of personal care to individuals are not automatically excluded, which is why the test matters.
What is the secondary threshold for National Insurance?+
The secondary threshold is the level of pay above which an employer starts paying Class 1 National Insurance on an employee. For 2026-27 it is 5,000 pounds a year, which is 96 pounds a week. Because the threshold is low, almost all of a carer's pay is above it, so employer National Insurance applies to nearly the whole wage rather than just the top slice, which is what makes it such a large cost for a staff-heavy business.
How does the National Insurance rise affect care fees?+
Employer National Insurance is a direct cost of every hour of care you deliver, so if it is not built into your fee it comes straight out of margin. For a staff-heavy domiciliary or home care business, the 15 percent rate on pay over 5,000 pounds adds materially to the true cost of a care hour. Providers that model this properly can evidence it in fee negotiations with councils and the NHS rather than absorbing it silently.
Is employer National Insurance the same as the carer's National Insurance?+
No. Employer National Insurance is a cost the business pays on top of wages, at 15 percent above the secondary threshold. The carer also has their own employee National Insurance deducted from their pay, at a separate rate and threshold. When people talk about the cost of the National Insurance rise to care providers, they mean the employer contribution, because that is the part that hits the business rather than the worker.
Kris is the account manager and day-to-day point of contact for LOYALS clients, working alongside our team of qualified accountants and experienced finance professionals across domiciliary care, care homes and children's services. Open Mon to Sat 10am to 7pm.
