Employer payroll:
the complete guide
Hiring an employee costs significantly more than their salary alone once employer National Insurance, pension contributions and admin are included, often 25-30% more. Electric company cars and salary-sacrificed pensions remain two of the most effective, fully legitimate ways to reduce both employer and employee tax cost.
Running payroll correctly means more than paying the right net wage, it means understanding the full employer cost, the tax-efficient benefit options available, and the deadlines HMRC and your employees both expect you to hit. This guide covers the essentials for UK employers.
The real cost of hiring someone
A £30,000 salary never actually costs £30,000, employer National Insurance, pension contributions and admin all add to the real figure. See our true cost of hiring guide for the full breakdown.
Electric company cars: a genuine tax win
Company car Benefit in Kind tax is banded by CO2 emissions, and fully electric vehicles sit in the lowest band by a wide margin, a saving that benefits both the employee and the employer's National Insurance bill. See our company car tax comparison.
Salary sacrifice for pensions
Salary sacrifice reduces both employee and employer National Insurance on pension contributions, by reducing the salary itself before tax is calculated, rather than contributing from already-taxed pay. See our salary sacrifice guide for how much it actually saves.
The deadlines employers can't miss
P60s are due by 31 May and P11Ds by 6 July each year, two separate forms with separate purposes and separate penalties for missing them. See our P60/P11D deadline guide for exactly what each form is and who needs one.
In this guide
The true cost of hiring an employee
Everything employer NI, pension and admin actually add.
Company car tax vs electric car tax
How Benefit in Kind compares for petrol, diesel and EV.
Salary sacrifice for pensions
How much you save, and what changes from 2029.
P60 and P11D deadlines
What employers need to do, and when.
Frequently asked questions
How much more does an employee cost beyond their salary?
Typically 25-30% more once employer National Insurance, pension contributions and admin costs are included on top of the headline salary figure.
Why are electric company cars taxed so much lower?
Benefit in Kind rates are banded by CO2 emissions, and fully electric vehicles produce none, placing them in the lowest tax band by a significant margin compared to petrol or diesel.
Does salary sacrifice save money for the employer too?
Yes, salary sacrifice reduces the salary itself before National Insurance is calculated, which lowers the employer's NI bill as well as the employee's.
What are the P60 and P11D deadlines?
P60s must be issued by 31 May each year, and P11Ds, where applicable, by 6 July, two separate forms covering different employee benefit information.
Get your payroll costs and benefits optimised
Book a free consultation and we'll review your payroll setup for genuine tax-saving opportunities.