UK Restaurant Employer NI Threshold Checklist (2026): Convert Payroll Rules Into Menu Math

Most owners track wage rates. Fewer track where payroll burden starts and how it compounds by item.

That gap is where menu margin slips.

Quick Summary

• Update NLW and employer NI assumptions before repricing.
• Convert payroll rules into loaded labor per item.
• Recheck labor-heavy SKUs first.
• Use one checklist across finance, ops, and menu teams.

2026 UK Inputs to Lock In

From UK government guidance:

• NLW (21+) from 1 April 2026: GBP 12.71/hour.
• Employer Class 1 secondary NI rate: 15%.
• Secondary threshold: GBP 5,000/year (2026-27 settings).

If your labor model misses one of these, your menu floor is likely understated.

Core Formula

loadedHourlyLabour = baseHourlyWage x (1 + employerOncostRate)
labourPerDish = loadedHourlyLabour x labourMinutesPerDish / 60
requiredNetPrice = (foodCost + labourPerDish + variableCosts) / (1 - targetMargin)

Worked Example

Assumptions:

• Base wage modeled: GBP 12.71
• Employer oncost rate assumption: 17%
• Labor minutes per dish: 10
• Food plus variable costs: GBP 6.40
• Target margin: 35%

loadedHourlyLabour = 12.71 x 1.17 = GBP 14.87
labourPerDish = 14.87 x 10 / 60 = GBP 2.48
requiredNetPrice = (6.40 + 2.48) / 0.65 = GBP 13.66
VAT-inclusive price = 13.66 x 1.20 = GBP 16.39

Rounded menu point: GBP 16.40 or GBP 16.50.

Payroll-to-Menu Checklist

1. Confirm current age-band wage assumptions by role.
2. Confirm NI threshold and employer NI rate in payroll settings.
3. Recalculate loaded hourly labor by role.
4. Re-time top labor-heavy items.
5. Rebuild net price floors and VAT-inclusive display prices.
6. Run 14-day contribution review.

Stop Rules

• Two weeks of contribution decline on updated items.
• Labor-per-dish variance above 10% vs assumption.
• Payroll outflow trend exceeds plan for two consecutive pay cycles.

Common Mistakes

1. Using NLW headline without NI loading.
2. Using one labor minute assumption for all dayparts.
3. Applying one flat percentage increase across all items.
4. Updating POS prices but not channel-price logic.

Related Guides

• UK Cafe Cash Runway Checklist (2026)
• UK Restaurant Labour Cost Calculator
• UK Menu Price Review Checklist
• UK Restaurant VAT Pricing Guide

KitchenCost helps you update labor and recipe assumptions together before price changes go live.

Try KitchenCost.

Sources (checked on 2026-02-14)

• GOV.UK - Minimum wage rates for 2026
• GOV.UK - Rates and thresholds for employers 2026 to 2027
• ONS - Consumer price inflation, UK: December 2025
• Reddit: r/UKSmallBusiness - rising-cost discussion