UK vs US Software Engineer Cost in 2026: The Fully Loaded Numbers
A median software engineer costs a UK employer about £115,600 a year in London and £81,100 in Manchester once employer National Insurance and the minimum pension are added. The comparable US figures are about $154,000 at the US national median salary and over $300,000 at the Bay Area median package, once employer payroll taxes and health insurance are added. So the UK is much cheaper than US tech hubs, and only a little cheaper than the US national average. Most "hire in the UK and save 50%" claims skip that second part.
Here are the workings, so you can redo them for your own roles.
The salary data
Two sources, used for different things:
- IT Jobs Watch tracks advertised salaries for UK permanent roles. For "software engineer" over the six months to 22 October 2026, the median was £70,000 across the UK (4,442 salaries), £100,000 in London (844) and £70,000 in Manchester (366) (UK, London, Manchester).
- Levels.fyi tracks self-reported total compensation (base, bonus and the yearly value of stock), skewed towards larger tech companies. Median for software engineers, all levels, as of 22 October 2026: £102,020 in London, $280,000 in the San Francisco Bay Area and $200,000 in New York (London, Bay Area, New York).
- For a US national baseline, the US Bureau of Labor Statistics puts the median annual wage for software developers at $135,980 (May 2025) (BLS).
What a UK employer pays on top of salary
- Employer National Insurance: 15% on earnings above £5,000 a year (2026 to 2027 tax year) (HMRC).
- Workplace pension: at least 3% from the employer, on qualifying earnings between £6,240 and £50,270 a year (GOV.UK). Many tech employers pay more, and on full salary, so treat this as the floor.
- Healthcare: the NHS covers it. Private medical insurance is a common perk, not a legal cost.
- Things I've left out because they vary: the Apprenticeship Levy (0.5% of the pay bill, only above £3m), bonuses, equity, equipment and office costs.
| UK, per engineer per year | London (median advert) | Manchester (median advert) |
|---|---|---|
| Salary | £100,000 | £70,000 |
| Employer NI (15% above £5,000) | £14,250 | £9,750 |
| Minimum employer pension (3% of £44,030) | £1,321 | £1,321 |
| Fully loaded minimum | £115,571 | £81,071 |
What a US employer pays on top of salary
- Social Security: 6.2% employer share, on wages up to $184,500 in 2026 (Journal of Accountancy).
- Medicare: 1.45% employer share, with no wage cap (same source).
- Health insurance: the average annual premium in 2025 was $9,325 for single cover and $26,993 for family cover, and covered workers paid on average 16% and 26% of those (KFF 2025 Employer Health Benefits Survey). That leaves the employer paying roughly $7,833 (single) or $19,975 (family). That split is my calculation from KFF's averages, not a KFF figure.
- Left out because they vary: federal and state unemployment taxes, 401(k) matching, bonuses and equity.
| US, per engineer per year (single health cover) | National median (BLS) | New York (Levels.fyi) | Bay Area (Levels.fyi) |
|---|---|---|---|
| Salary or package | $135,980 | $200,000 | $280,000 |
| Social Security (6.2%, capped at $184,500) | $8,431 | $11,439 | $11,439 |
| Medicare (1.45%) | $1,972 | $2,900 | $4,060 |
| Employer health premium (single) | $7,833 | $7,833 | $7,833 |
| Fully loaded | $154,215 | $222,172 | $303,332 |
With family cover instead, add about $12,000 to each US column.
Putting them side by side
The pound moves, so convert with today's rate. At around $1.32 to the pound (early October 2026, currency-converter.org.uk), the London median advert comes to about $152,600 fully loaded and Manchester to about $107,000.
- London vs US national median: roughly the same. If your alternative is a median US engineer outside the big tech hubs, London won't save you much.
- London vs New York and the Bay Area: this is where the saving is. Comparing like with like on Levels.fyi, London's median package is £102,020 (about $135,000) against $200,000 in New York and $280,000 in the Bay Area.
- UK outside London vs US tech hubs: the biggest gap. A Manchester engineer at the median advert costs about a third of a Bay Area package, fully loaded.
Two caveats:
- Advertised salaries (IT Jobs Watch) and reported packages (Levels.fyi) are different measures. Don't mix them in one comparison without saying so, which is why the tables above keep them in separate columns.
- Medians hide a lot. Senior and AI roles in London are far above them: City AM reported Anthropic advertising London research engineering roles at up to £630,000 before stock (City AM). I go into that in hiring AI engineers in the UK.
The costs that aren't on the payslip
- Recruitment. Agency fees, or your own engineers' time spent screening. Our technical recruitment puts engineers on the screening so yours don't have to.
- Time to hire. Typically eight to twelve weeks from posting a UK role to someone starting, plus a notice period that is often one to three months.
- Set-up. If you open your own UK subsidiary, budget for UK accounting, payroll, legal and company secretarial work. Overseas companies with a UK establishment have their own filing duties (GOV.UK).
- Leadership. A UK team without a senior technical lead on the ground costs you in rework and churn. That's the line item people forget most often.
The cheapest way to get the saving
If the goal is the US tech hub saving without the set-up cost, you have three options: an employer of record for one or two people you have already found, your own UK subsidiary, or a managed team you can take in-house later. We do the last two as our UK R&D Lab: either we employ and run the team for you, or we help you open your own subsidiary. In both cases our CTOs hire the engineers, and a local full-time or fractional CTO leads them. To run these numbers for your own roles, try our free UK Expansion Planner. Pricing is on request, because it depends on the roles and the location model. If you're coming at this from the US side, building a UK engineering team as a US company covers the case for it.
Frequently asked questions
How much does it cost to employ a software engineer in the UK? At the London median advert of £100,000, about £115,600 a year with employer National Insurance and the minimum pension. At the Manchester median of £70,000, about £81,100.
Are UK software engineers cheaper than US ones? Than San Francisco and New York, clearly. Than the US national median, only slightly, once you account for the fact that UK employers don't pay health insurance but do pay 15% National Insurance.
What is employer National Insurance in 2026? 15% on employee earnings above £5,000 a year, for the 2026 to 2027 tax year.
Do I have to pay health insurance for UK employees? No. The NHS covers healthcare. Private medical insurance is an optional benefit.