Free tool
First-Hire Affordability Calculator
The salary is not the cost. This is the cost.
Employer National Insurance, pension contributions, equipment, software and recruitment all sit on top of the advertised salary. Model the full figure before you write the job advert.
Last reviewed:
Your result
£37,763
True cost of the hire in year one
That is 25.9% more than the advertised salary, or £3,147 a month.
- Tax-year configurationhttps://www.gov.uk/guidance/rates-and-thresholds-for-employers-2026-to-2027
- 2026/27
- Salary
- £30,000
- Employer NI above £5,000 threshold
- £3,750
- Employer pension on qualifying earnings3% of £23,760 qualifying earnings
- £713
- Set-up and recruitment
- £3,300
- Total monthly cost
- £3,147
- Your monthly surplus
- £2,500
- Headroom after the hire
- -£647
- Reserve you should hold first (3 months)
- £9,441
On these figures the hire does not fit your current surplus. A part-time hire, a contractor or a delayed start are all reasonable alternatives.
Revenue supporting a first hire should be contracted, not hoped for. Model a quarter where a major client pauses.
Worth pausing on
- Funding a permanent salary with credit is a common and expensive mistake. Salary is a recurring cost; credit is not recurring income.
How to interpret the first-hire estimate
Use the gross annual salary from the proposed role, then add the employer costs and first-year setup items shown. The 2026/27 configuration uses the employer-NIC and qualifying-earnings assumptions displayed in the result; tax-year rates and payroll rules need to be refreshed when HMRC publishes a new year. This is a planning estimate, not a payroll calculation.
The monthly surplus input should be what remains after the owner’s pay, tax reserve and existing commitments—not the current bank balance. The tool compares that surplus with the loaded monthly hire cost and shows a three-month reserve because a new hire is a recurring obligation even when sales slow or the expected productivity ramp does not arrive.
A result that fits is not proof that the business can employ someone. Check employment status, worker eligibility, pension duties, payroll setup, holiday and other employment costs with the appropriate qualified adviser or payroll provider. If the estimate does not fit, do not bridge a recurring salary gap with credit; revisit scope, timing or contracted revenue instead.
- Confirm whether the person is an employee or contractor before applying employee-cost assumptions.
- Refresh the selected tax-year configuration and payroll inputs when the tax year, salary, pension arrangement or employment terms change.
- Stress-test a quarter with a delayed customer receipt or lost contract; the calculator does not model revenue, productivity or redundancy costs.
Assumptions this tool makes
- The selected tax-year configuration models employer National Insurance only above the annual Secondary Threshold, rather than on the whole salary.
- Where pension auto-enrolment applies, the minimum employer contribution is calculated at 3% of qualifying earnings between the lower and upper band. Eligibility and scheme-specific contribution rules can differ.
- Recruitment and equipment costs are spread over the first twelve months. No productivity ramp-up is assumed — treat the first three months as cost, not contribution.
The formulas used
- employer_NI = max(0, salary - secondary_threshold) x employer_NI_rate
- employer_pension = max(0, min(salary, qualifying_earnings_upper) - qualifying_earnings_lower) x employer_pension_rate
- annual_cost = salary + employer_NI + employer_pension + equipment + software + recruitment
- monthly_cost = annual_cost / 12
- months_of_runway_needed = 3 x monthly_cost
Estimates only. This is a planning aid, not regulated financial advice, tax advice or a personal recommendation. Figures are rounded deliberately to avoid false precision. Your answers stay in your browser: nothing you type here is sent to us, to a partner or to an advertising platform. Read the full disclaimer.