Employers N.I. & Employers Pensions Explained: Codes 7006 & 7007

An employee's gross pay isn't the full cost of employing them — the employer also has to pay its own share of National Insurance and, for most workers, a minimum pension contribution on top.

The codes, and what each one holds

Code 7006 — Employers N.I. (Non-Directors) records the employer's National Insurance contribution on regular staff pay — a genuine additional cost to the business, separate from the NI deducted from the employee's own pay.

Code 7007 — Employers Pensions records the employer's contribution to workplace pension schemes under auto-enrolment, currently a minimum of 3% of qualifying earnings for most employees. Both are Overheads codes and normally carry a debit balance.

Real-world examples across industries

Retail and hospitality

A retail business with a large number of part-time staff paid close to the secondary NI threshold has a relatively low employer NI bill per head, even with a sizeable headcount — a monthly charge of £1,450 debited to 7006 (Employers N.I. (Non-Directors)) and credited to 1200 (Bank) or a PAYE/NI control account, with no VAT involved. High staff turnover and a lot of casual or short-term workers also means auto-enrolment eligibility has to be reassessed every pay period, since someone who wasn't eligible one month can cross the earnings threshold the next — a correspondingly volatile £950–£1,600 monthly pension contribution debited to 7007 (Employers Pensions) rather than the steady figure a stable workforce would produce.

Manufacturing or professional services

A manufacturing or professional services firm with fewer but better-paid employees sees a higher employer NI charge per head, since NI is charged on earnings above the threshold rather than a flat amount per employee — a £5,200 monthly charge on a much smaller headcount than the retail example above, still a debit to 7006 and a credit to 1200. Because staff turnover is low and pay is stable month to month, the pension contribution is predictable too: £2,100 debited to 7007 and credited to 1200 or a pension liability account pending payment to the scheme provider, changing little from one month to the next.

Why this matters day to day

These two costs are easy to overlook when budgeting for a new hire, since they don't appear on the employee's own payslip but still hit the business's bank account every month. Keeping them in their own codes rather than buried inside gross wages means the true, fully-loaded cost of the workforce is always visible when pricing work or planning for growth.