How much does a £30,000 employee actually cost me?

On 2026/27 rates, before any reliefs: £30,000 of salary, plus employer's National Insurance at 15% on everything above the £5,000 secondary threshold, which is £3,750, plus a minimum employer pension contribution of 3% of qualifying earnings — 3% of (£30,000 − £6,240) — which is £712.80. That comes to £34,462.80, roughly 15% above the headline, and it still excludes employers' liability insurance, a laptop, software licences and the weeks before someone is fully productive. But if this is your first employee and you were previously a sole director, the £10,500 Employment Allowance may now be available and can wipe out the National Insurance entirely. Work out both numbers before you decide.

Do I register as an employer before I hire, or before the first payday?

Before the first payday is the hard deadline, but in practice register as soon as you have made the offer. HMRC issues your PAYE reference and Accounts Office reference by post, and you cannot file a Full Payment Submission without them. Real Time Information means that submission is due on or before the day the money leaves your account, so references that arrive the following week mean a late filing on your very first payroll run. There is no advantage in waiting and a real risk in it. If the start date is close, register first and settle the contract wording second.

Can I claim the Employment Allowance?

Most employers can, and it is worth up to £10,500 off the year's employer's National Insurance bill. The exception that catches limited companies is the sole-director rule: where the only person liable for secondary Class 1 National Insurance is a single director, you cannot claim. Taking on a first employee paid above the £5,000 secondary threshold normally changes that. You also cannot claim in respect of workers engaged under the off-payroll working rules, or for domestic staff who are not carers or support workers, and only one company in a connected group may claim. You claim through your payroll software, and you must claim again each tax year — it is not automatic.

My new employee says they don't want the pension. Can I skip it?

No. You must assess them and, if they qualify — aged 22 to State Pension age and earning over £10,000 — enrol them into the scheme first. They can then choose to opt out, and if they do so within the opt-out window their contributions are refunded. What you cannot do is agree in advance not to enrol someone, or encourage them to opt out; inducement is an offence and is exactly what The Pensions Regulator looks for. You also have to re-enrol eligible staff roughly every three years, and file a declaration of compliance within five months of your duties start date whether anyone joined or not.

How quickly do I need to give a written contract?

The written statement of employment particulars is a day-one right — it must be given on or before the employee's first day, not within two months as the older rule allowed. It has to cover pay, hours, holiday, notice, job title, place of work, probation, training entitlement and any other benefits. A generic template pulled off the internet is better than nothing but worse than a statement that matches the arrangement you have actually agreed: the whole point of the document is to remove ambiguity, and a template describing a different job puts it straight back in. Get it drafted while you are waiting for your PAYE references to arrive.

Could I take the person on as self-employed instead and avoid all this?

Only if they genuinely are self-employed, and that is decided by how the working relationship actually operates rather than by what the paperwork calls it. If you control what they do and when and how they do it, they work set hours at your premises, they cannot send a substitute and they carry no financial risk, HMRC will treat them as employed however the invoice is worded. The bill for getting it wrong lands on you: back-dated PAYE, employer's National Insurance, interest and penalties, plus any employment rights they turn out to have had all along. Where it is genuinely borderline, get it looked at before the first payment, not after HMRC asks.

Hiring Your First Employee: A Practical Guide

The moment payroll becomes real

Up until your first hire, payroll simply hasn't applied to you. The moment someone else joins, a set of ongoing obligations kicks in: registering as an employer, running payroll each pay period, reporting to HMRC on or before every payday, and making sure the right deductions and pension contributions happen automatically rather than being worked out after the fact. It is also the point at which the business stops being just about you — deadlines, obligations and someone else's livelihood are now tied to how well you run this part of things.

Almost none of it is difficult. Nearly all of the trouble first-time employers get into comes from doing things in the wrong order — advertising a salary before working out what it costs, or agreeing a start date before registering with HMRC. So this guide runs in the order the work actually has to happen, with the 2026/27 rates written out rather than left for you to look up.

Before you advertise: work out the fully-loaded cost

The salary is not the cost. Here is the arithmetic on a £30,000 hire starting on 6 April 2026, using the rates for the 2026/27 tax year. The salary figure is illustrative; the rates are real.

Salary: £30,000.
Employer's National Insurance: 15% of everything above the secondary threshold of £5,000 a year. That is (£30,000 − £5,000) × 15% = £3,750.
Employer's pension contribution: a minimum of 3% of qualifying earnings. Qualifying earnings are the slice between £6,240 and £50,270, so £30,000 − £6,240 = £23,760, and 3% of that is £712.80.
Employers' liability insurance: legally required from the day you become an employer, with at least £5 million of cover.
Kit, software licences, a desk — whatever the role actually needs to function.

So a £30,000 hire is £34,462.80 before you have bought them a laptop — roughly 15% on top of the headline number. Budget on the salary alone and you are 15% short before anyone has started.

The Employment Allowance changes that number — and most first-time employers miss it

This is the part worth reading twice. The Employment Allowance lets eligible employers knock up to £10,500 off their employer's National Insurance bill for the year. A company whose only employee liable for secondary Class 1 National Insurance is a single director cannot claim it. Take on your first employee and, in most cases, you can.

Run the same company through it — a director on a £30,000 salary, hiring one employee on £30,000, from 6 April 2026:

Before the hire: employer's NI on the director alone is (£30,000 − £5,000) × 15% = £3,750. No Employment Allowance available. The company pays £3,750.
After the hire: employer's NI on the two of them is £7,500. The Employment Allowance covers up to £10,500 of it. The company pays nothing.

The employer's NI bill went down by £3,750 in the year the company took on its first employee. The real first-year NI cost of that hire is not £3,750 — on these figures it is minus £3,750. It does not work out like that for everyone: if you already claim the allowance, or your NI bill is larger than £10,500, the maths is different. But it is worth doing the sum before you conclude you cannot afford the hire.

Check the salary clears the minimum wage — properly

From 1 April 2026 the National Living Wage for workers aged 21 and over is £12.71 an hour. It is £10.85 for 18 to 20 year olds, and £8.00 for under-18s and for apprentices who are under 19 or in the first year of their apprenticeship.

The trap is that an annual salary can look perfectly generous and still breach it. A £24,000 salary for a 40-hour week is £24,000 ÷ 2,080 hours = £11.54 an hour — below the £12.71 floor, and an underpayment HMRC can pursue with penalties and public naming. For a 40-hour week you need at least £12.71 × 2,080 = £26,436.80. Do that division before you put a number in the advert, not after someone queries their payslip.

Register as an employer — before the first payday

You register with HMRC as an employer and receive a PAYE reference and an Accounts Office reference. You need both for every payroll submission you will ever make. Register before the first payment is made, and allow time — the references arrive by post and are not instant.

Leaving this to the week of payday is the most common first-time-employer scramble there is, and it is entirely avoidable. Real Time Information means your first Full Payment Submission is due on or before the day the money leaves your account. A reference that turns up the following week means your very first payroll filing is already late.

Right to work, and the day-one paperwork

Two things have to happen before the first day, not after it.

First, a right to work check. You must confirm that every employee is legally allowed to do the job before they start — using their original documents or the Home Office online checking service — and keep a dated copy for as long as they work for you plus two years. Do it for everyone you hire rather than only the people you think need it: that is both the law and the only defensible position if you are ever asked.

Second, the written statement of employment particulars. Every employee and worker is entitled to one on or before their first day — covering pay, hours, holiday entitlement, notice periods, job title, place of work, probation and training. "I'll sort the contract out once they've settled in" has not been an acceptable answer since April 2020. A clear statement protects both sides: it sets expectations properly, and it is the document you will reach for if things go wrong later.

Set payroll up properly

PAYE runs on Real Time Information, which means reporting to HMRC on or before every payday rather than once a year. Practically, that needs recognised payroll software and three things done correctly at the outset:

The starter's details, taken from their P45 or, where they do not have one, HMRC's starter checklist.
The right tax code. Get this wrong and the first payslip is wrong — a poor first impression, and a fiddly thing to unwind across later pay runs.
A fixed pay frequency and pay date, chosen and stuck to. Every run has to calculate gross pay, Income Tax, employee's National Insurance (8% between £12,570 and £50,270 and 2% above that), employer's National Insurance and pension contributions — then file the details on or before the day the money moves.

Payroll after a first hire is not an annual task. It is twelve or fifty-two recurring deadlines, each with a filing attached to it.

Auto-enrolment: separate rules, separate regulator

Pension duties start on the day your first employee starts — your duties start date — and they run to their own timetable, overseen by The Pensions Regulator rather than HMRC. For 2026/27:

Anyone aged 22 to State Pension age earning over £10,000 a year must be assessed and automatically enrolled into a qualifying workplace pension scheme.
Contributions are calculated on qualifying earnings — the band from £6,240 to £50,270.
The minimum total contribution is 8% of qualifying earnings, of which at least 3% must come from you as the employer. The employee makes up the difference.
Staff earning below the trigger can still ask to join, and in some cases you must contribute for them too.
You must file a declaration of compliance with The Pensions Regulator within five months of your duties start date — even if nobody qualified for enrolment.

That last point catches people out. The declaration is a separate filing from anything you do with HMRC, and "nobody was eligible" is not a reason to skip it.

Holiday, and what a working day really costs

Full-time employees are entitled to 5.6 weeks of paid holiday a year — 28 days for someone working a five-day week. You may count bank holidays towards that entitlement, but you are not obliged to.

Take the £30,000 hire again. A five-day week is around 260 working days a year; take off 28 days of holiday and you have roughly 232 days of actual work. Against the fully-loaded £34,462.80 (before any Employment Allowance), that is about £148 for every day they are at their desk — not the £115 you get if you divide the salary by 260 and forget everything else. If you price work by the day, price it off the honest number.

What tends to go wrong

The mistakes first-time employers make are rarely dramatic. They are: registering as an employer too late and running a payday without a PAYE reference; missing the declaration of compliance; getting a starter's tax code wrong and unpicking it three payslips later; forgetting employers' liability insurance entirely; and budgeting on the headline salary. Every one is cheaper to prevent than to correct, and none of them is a judgement call — they are all just sequence.

Your first-hire checklist — do this week

Work out the fully-loaded cost: salary, plus 15% employer's NI on everything above £5,000, plus 3% of qualifying earnings for pension, plus insurance and kit.
Check whether this hire makes you eligible for the £10,500 Employment Allowance for the first time.
Divide the salary you have in mind by the annual hours and confirm it clears £12.71 (or £10.85, or £8.00).
Register as an employer with HMRC now — not the week of payday.
Arrange employers' liability insurance with at least £5 million of cover, and display the certificate.
Draft the written statement of particulars ready to hand over on or before day one.
Build the right to work check into your offer process so it happens before the start date.
Choose payroll software, fix the pay date, and get the P45 or starter checklist in before the first run.
Set up a qualifying pension scheme and diarise the declaration of compliance five months out.

Where Buzz fits in

This is exactly what our payroll and pensions service is built to handle — your team paid correctly and on time, Real Time Information filed on every payday, auto-enrolment assessed and the declaration of compliance made, so a first hire does not turn into a new source of admin on top of everything else that comes with growing. If you want the wider picture on what a hire does to your numbers, read what a new hire actually costs, and if you run a limited company our guide for limited company directors covers the filings that sit alongside payroll. Every date for the year is on our key tax dates for 2026/27 page.

If you are approaching your first hire and want it set up properly from day one, book a free discovery call and we will walk you through exactly what needs to be in place before payday.

Rates and thresholds are those for the 2026/27 tax year, with National Minimum Wage rates as they apply from 1 April 2026. Salary figures used in the examples are illustrative.

Hiring your first employee: a practical guide