Employer NI on Umbrella Workers
Why the 15% employer NI charge comes from your assignment rate — and exactly how much it costs at every day rate.
Last updated: April 2026 · Source: HMRC gov.uk
What is Employer's National Insurance?
Employer NI (Class 1 Secondary contributions) is paid by employers on employee earnings. For 2026/27, the rate is 15% on earnings above £5,000/year (£96.15/week).
When you work through an umbrella company, it is your employer and legally responsible for this charge. But because the agency pays a fixed assignment rate, the umbrella cannot recover this cost from the agency — so it deducts employer NI from the assignment rate before calculating your gross salary.
The Formula
Employer NI = (Assignment Rate − £5,000) × 15%
Examples (2026/27):
Rate History: The April 2025 Changes
The Spring 2024 Budget announced two simultaneous changes effective April 2025: the employer NI rate rose from 13.8% to 15%, and the secondary threshold fell from £9,100 to £5,000. This double change significantly increased the employer NI burden for umbrella workers.
| Tax Year | Rate | Secondary Threshold |
|---|---|---|
| 2022/23–2024/25 | 13.8% | £9,100/yr |
| 2025/26 | 15% | £5,000/yr |
| 2026/27(current) | 15% | £5,000/yr |
Employer NI vs Employee NI: What Is the Difference?
- Employer NI (15% above £5,000): Deducted from the assignment rate before gross salary is set — reduces how much you earn from
- Employee NI (8% to £50,270, 2% above): Deducted from gross salary via PAYE — the same as any employee
On a £120,000 assignment rate, you indirectly bear roughly £17,250 in employer NI, and then pay £4,000–£5,000 in employee NI from your gross salary on top.
HMRC: Employer NI rates and thresholds2026/27 Quick Reference
Rate: 15%
Threshold: £5,000/year
On £120k: £17,250 deducted