What a £25,000 employee really costs you in 2026

Martyn Butler, founder · Updated 21 October 2026 · 5 minute read

The short answer

A £25,000 UK employee costs you £28,562.80 a year before recruitment and sick pay, at 2026 to 2027 rates. That adds £3,000 of employer National Insurance and £562.80 of minimum pension to the salary. Spread over the hours actually worked after 28 days' holiday, £12.82 an hour on the payslip becomes £16.42. An agency fee of 20% would add £5,000 in year one.

A £25,000 hire, fully costed

Here is one full-time employee on £25,000 a year, working 37.5 hours a week, at the employer rates for the 2026 to 2027 tax year. Their salary works out at £12.82 an hour, a little above the National Living Wage of £12.71.

	A year
Salary	£25,000.00
Employer National Insurance (15% on pay above £5,000)	£3,000.00
Employer pension, the legal minimum (3% on earnings from £6,240)	£562.80
What the law adds to the salary	£28,562.80
That, per hour they actually work (after 28 days' holiday)	£16.42
If an agency charges 20% of first-year pay	£5,000.00 more in year one
Year one, with that agency fee	£33,562.80

How the figures are worked out

Employer National Insurance is 15% of pay above the secondary threshold of £5,000 a year: 15% of £20,000 is £3,000.
The minimum employer pension contribution under automatic enrolment is 3% of qualifying earnings, which start at £6,240 a year: 3% of £18,760 is £562.80.
Per hour worked divides £28,562.80 by 1,740 hours: 46.4 working weeks of 37.5 hours, because a full-time employee is entitled to 5.6 weeks, or 28 days, of paid holiday.
The agency fee is an example, not a quote. Agencies charge a percentage of the first year's pay for a permanent hire, and the percentage varies by agency and role. Ask for theirs before you start.
Sick pay, equipment, software, training and your own time are not in the table. Each adds to it.

Holiday: paid, but not working

A full-time employee is entitled to 28 days of paid holiday a year, and you can count bank holidays within it. That is about £2,692 of a £25,000 salary paid for weeks when no work is done. Spread over the hours actually worked, holiday together with National Insurance and pension is why the £12.82 on the payslip becomes £16.42.

If the work cannot wait while they are away, someone else has to do it: you, another member of the team, or temporary cover you pay for on top.

When they are off sick

Statutory Sick Pay is £123.25 a week or 80% of their normal weekly earnings, whichever is lower, for up to 28 weeks. You pay it, and the work they would have done still needs doing. Many employers also choose to pay more than the statutory amount, which is a decision worth making before you hire rather than the first time someone is ill.

Finding the person

An agency fee is the visible part of recruitment. The invisible part is your time: writing the advert, reading applications, interviewing, checking references and the right to work in the UK, then onboarding. If the hire does not work out, much of that is spent again.

The costs with no fixed price

A laptop, a phone if the job needs one, and somewhere to work.
A licence for each tool they use: email, your CRM, your accounts software, a phone line.
Training in your way of doing things, which is weeks of your attention before they are fully useful.
Managing them: one-to-ones, reviews, holidays to approve, and the conversations nobody enjoys when something goes wrong.
Payroll and HR administration, done by you or paid for.

The Employment Allowance

Many small employers can claim the Employment Allowance, which takes up to £10,500 a year off employer National Insurance in 2026 to 2027. For a first hire on £25,000 it would cover the £3,000 entirely, bringing what the law adds down to £25,562.80. Not every business can claim it: a company whose only director is also its only employee paying National Insurance cannot, for example. Check with your accountant before you count on it.

Where a virtual assistant fits

For work that needs someone in the building, a UK hire is the answer. For the admin and operations that fill most owners' weeks, inboxes, diaries, bookings, chasing, data entry and reports, the work can be done remotely, and the cost looks very different.

With Mango & Co., your VA is contracted to us, so there is no employer National Insurance, pension or payroll on your side. We recruit for your role and set the strongest candidates a timed exercise built from its real work before you choose. We pay them, cover their holiday and sick days within the monthly price, supervise them from the UK, and replace them if it is not working, with your procedures kept.

It is not the right answer for every business, and the honest way to decide is with your own numbers rather than ours.

Work out your own numbers

Our virtual assistant cost page puts a UK hire and the VA routes side by side, with a calculator where you can put in the rate you would really pay. For the whole picture for your business, including which jobs to hand over first and what a managed VA would cost next to a UK hire, our free plan at /fit takes about three minutes.

Common questions

How much is employer National Insurance in 2026 to 2027?

Employer National Insurance is 15% of pay above the secondary threshold of £5,000 a year in 2026 to 2027. For an employee on £25,000, that is 15% of £20,000, or £3,000 a year. Many small employers can claim the Employment Allowance, which takes up to £10,500 a year off the bill.

What is the minimum employer pension contribution in the UK?

The minimum employer contribution under automatic enrolment is 3% of qualifying earnings, which start at £6,240 a year in 2026 to 2027. For an employee on £25,000, that is 3% of £18,760, or £562.80 a year, on top of the salary and employer National Insurance.

How much paid holiday does a full-time employee get?

A full-time employee is entitled to 5.6 weeks, or 28 days, of paid holiday a year, and you can count bank holidays within it. On a £25,000 salary that is about £2,692 paid for weeks when no work is done, and if the work cannot wait, someone else has to cover it.

How much is Statutory Sick Pay?

Statutory Sick Pay is £123.25 a week or 80% of the employee's normal weekly earnings, whichever is lower, for up to 28 weeks. You pay it, and the work they would have done still needs doing. Many employers also choose to pay more, which is a decision worth making before you hire.

Can I claim the Employment Allowance for my first employee?

Many small employers can, and in 2026 to 2027 it takes up to £10,500 a year off employer National Insurance, which would cover the £3,000 on a £25,000 hire entirely. Not every business qualifies: a company whose only director is also its only employee paying National Insurance cannot, so check with your accountant first.