True Cost of a Care Hour Calculator
The hourly wage is only the start. Paid travel time, mileage reimbursement, employer National Insurance, pension contributions and holiday accrual all add to the cost of delivering a care hour. Enter your figures to see the true cost and whether your LA or private rate covers it.
True Cost of a Care Hour Calculator
The hourly wage is only the start. Paid travel time, mileage reimbursement, employer National Insurance, pension contributions and holiday accrual all add to the cost of delivering a care hour. Enter your figures to see the true cost and whether your LA or private rate covers it.
The National Living Wage from 1 April 2026 is £12.71/hr for workers aged 21+. Travel time must also be paid at least at NMW.
Hours of face-to-face care delivered each week (not including travel).
Average travel time paid per delivered care hour. Travel between calls must be paid at least at NMW.
Average miles driven between calls per delivered care hour. Reimbursed at AMAP rate (55p/mile from 6 April 2026).
Percentage to add for training, PPE, DBS checks, management and admin. Typically 8-15% for a domiciliary agency.
The hourly rate you charge to the local authority or private client.
The charged rate does not cover the true delivery cost. This is a loss-making rate once all employment costs are included. Local authority rates in many areas do not meet the true cost of care.
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Why the headline wage understates the true cost of a care hour
The National Living Wage rose to £12.71 per hour on 1 April 2026 for workers aged 21 and over. But that figure is only the starting point for a domiciliary care agency. The actual cost of delivering one care hour is typically 35-60% higher once all statutory and operational costs are included.
Travel time between calls must be paid at least at National Minimum Wage under HMRC working-time rules. If a carer spends 15 minutes travelling for every hour of care delivered, that is 25% more payroll even before any other additions. Agencies that do not pay travel time are exposed to NMW enforcement action and HMRC back-payment orders.
Holiday pay for irregular-hours workers accrues at 12.07% of pay (1/12.07 reflecting 5.6 weeks' statutory leave). From April 2024, this must be calculated using the 52-week average pay reference period for variable-hours workers, which captures paid travel time and any overtime.
Employer National Insurance is charged at 15% on earnings above the secondary threshold of £5,000 per year (2026/27). The Autumn Budget 2024 (effective April 2025) increased the rate from 13.8% and cut the threshold from £9,100, raising per-employee costs significantly. Auto-enrolment pension adds 3% on qualifying earnings between £6,240 and £50,270.
Mileage reimbursement at the HMRC Approved Mileage Allowance Payment rate of 55p per mile (from 6 April 2026, up from 45p) is a direct cost. For a rural agency where carers drive 5-6 miles per care hour, this alone adds £2.75-£3.30 to the true cost.
Local authority fee rates in many areas have not kept pace with the true cost of care. The Care Quality Commission's 2023 and 2024 State of Care reports noted that below-cost LA rates are a financial viability risk for providers. This calculator gives agencies the data they need when negotiating rates or making the case for uplifts.
Frequently asked questions
Does travel time count as working time for NMW?
Yes. Travel between care calls is working time and must be paid at least at the National Minimum Wage. This includes driving time and any waiting time between calls if the worker cannot use that time freely. HMRC has pursued enforcement action against care agencies that excluded travel time from NMW calculations.
What is the holiday accrual rate for irregular-hours care workers?
12.07% of pay, calculated using a 52-week average of all remuneration including paid travel time. This is the statutory 5.6 weeks' leave expressed as a fraction of working time (5.6 / 46.4 = 12.07%). From April 2024, the reference period for variable-hours workers is 52 weeks.
What is the AMAP mileage rate from April 2026?
55p per mile for the first 10,000 miles per year for cars and vans, up from 45p. This increase was made in Finance Act 2026 and took effect from 6 April 2026. Payments at or below the AMAP rate are free of income tax and NIC for the employee.
What employer NIC rate applies in 2026/27?
15% on earnings above the secondary threshold of £5,000 per year (£96 per week). The rate was increased from 13.8% and the threshold cut from £9,100 per year, both effective from April 2025. These changes significantly increased the per-employee NIC cost for care employers.
What is a typical domiciliary care agency margin?
Industry bodies suggest a sustainable margin is 10-15% over the true cost of care delivery. Many LA fee rates in England produce margins below 5% or even negative margins once all employment costs are included, which is a financial viability concern flagged repeatedly by CQC and Skills for Care.
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Tell us about your care business and we will confirm your exact figures and the compliance steps that apply to you. No obligation.