- Published on June 19, 2025

As a UK business leader, one of the biggest decisions you'll make is hiring a new team member. You've budgeted for the salary, but is that the true cost? In reality, the figure on the payslip is just the tip of the iceberg. The total investment is significantly higher, and understanding these hidden costs is critical for smart financial planning and sustainable growth.

Let's break down the real cost of a UK employee, so you can see the full picture.

The Visible Cost: The Annual Salary

This is the number everyone focuses on. Let's assume you're hiring a skilled professional for a role with a competitive salary of £45,000.

The Hidden Overheads: Beyond the Salary

This is where the costs begin to multiply. For every employee, a UK business is responsible for several additional, mandatory expenses.

1. Employer's National Insurance (NI) Contributions

You must pay Class 1 National Insurance for your employees. As of the 2024/25 tax year, this is 13.8% on earnings above the secondary threshold. For a £45k salary, that's roughly £4,954 per year.

2. Workplace Pension Contributions

Under auto-enrolment rules, you are required to contribute a minimum of 3% of qualifying earnings to your employee's pension. That adds another £1,350 per year.

3. Recruitment & Onboarding Costs

Finding the right person is expensive. UK recruitment agencies often charge 15-25% of the first year's salary. That’s a one-time cost of £6,750 on a £45k salary, not including the internal time and productivity lag during onboarding.

4. Office Space, Equipment & Software

Even with hybrid models, you need to provide a workspace and tools. This includes office rent (est. £4,800/year), equipment (est. £1,500), and software licenses (est. £500/year).

Calculating the True Cost: An Example

As you can see, your £45,000 employee actually costs your business nearly £60,000 in their first year, with an ongoing cost of over £51,000. And that's before factoring in office space and other overheads.

The Smarter Alternative: A Managed Offshore Team

Now, compare this to a dedicated, university-educated professional from Backdesk. For a high-skilled role, your cost is a simple, predictable fee starting from £900/month (£10,800/year). This single fee includes:

• The professional's salary.
• All recruitment and vetting costs.
• All HR, payroll, and local compliance.
• Office space, high-performance IT, and infrastructure.
• A dedicated management layer ensuring quality and productivity.

The Result: You get a world-class team member, fully integrated into your business, for a fraction of the true UK cost. This isn't just about saving money; it's about reallocating that saved capital into activities that drive real growth.