# How much do UK employers spend above the market on benefits?

> In the lumi pool, UK employers spend 0.90% to 3.23% of payroll above their peers on benefits that reach few employees, by size (270 measured, 2026).

Source: https://lumihr.co.uk/guides/benefits-spend-above-market-by-size
Author: David Whitfield (https://lumihr.co.uk/about/david-whitfield)
Review by: 12 May 2027

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*By David Whitfield · lumi pool, 12 November 2026 · Review by 12 May 2027*

**In the lumi pool, the middle employer spends between 0.90% and 3.23% of payroll above its peers' usual level on benefits that reach few employees, and the share is higher in each larger size band: 0.90% at 50 to 249 employees (n = 48), 1.30% at 250 to 999 (n = 48), 2.49% at 1,000 to 4,999 (n = 62), 2.94% at 5,000 to 9,999 (n = 64) and 3.23% at 10,000 or more (n = 48). lumi pool, 12 November 2026, 270 measured.**

> **In short**
> - The figure counts one group of benefits: those lumi rates 4 or under out of 10 for how many employees a benefit reaches and how much it is felt.
> - More than half of it is long-term incentive or equity plans and status company cars.
> - For 1,000 employees on mean UK pay it comes to £1.07m a year. For 250 employees it is £140,000.
> - Above the market is not waste if the employer meant to lead. The question the figure asks is whether it is on purpose.
> - The same employer is below the market on 85 of the 133 benefits compared.
> - These are organisations in the lumi HR community, not a random sample of UK employers.

## What does the figure measure?

It measures where an employer provides more than its peers on benefits that few employees feel.

For each benefit, lumi compares an employer's position with the usual position of its peers. Where the employer is above, lumi prices the gap as a share of payroll, using its own estimate of what that benefit costs. The figure adds those gaps together for one group of benefits only: the ones lumi rates 4 or under out of 10 for how many employees a benefit reaches and how much it is felt.

"The middle employer" is the median. Half of the employers measured in a size band spend more above the market than the figure shown, and half spend less.

## How much is it at each size?

The share of payroll is higher in every larger size band.

| Size band | Employers measured | Share of payroll | Example employer | A year, on mean UK pay |
|---|---|---|---|---|
| 50 to 249 employees | n = 48 | 0.90% | 100 employees | £39,000 |
| 250 to 999 employees | n = 48 | 1.30% | 500 employees | £279,000 |
| 1,000 to 4,999 employees | n = 62 | 2.49% | 1,000 employees | £1.07m |
| 5,000 to 9,999 employees | n = 64 | 2.94% | 5,000 employees | £6.31m |
| 10,000 or more employees | n = 48 | 3.23% | 10,000 employees | £13.9m |

The pounds are the share of payroll multiplied by headcount and by mean pay of £42,926 per employee, all sectors (ONS Annual Survey of Hours and Earnings 2026, provisional) [2]. The [calculator](/calculator) does the same sum for any headcount from 50 to 10,000 and for 14 sectors, and gives the result as a PDF or a spreadsheet.

Sector changes mean pay only. lumi's rate is the size band's whichever sector is chosen.

## What is the spend made of?

More than half of it is long-term incentive or equity plans and status company cars.

Both are rewards for a small group, usually a senior one. That is why they rate low on reach. It is also why most employers that have them chose to.

For how UK employers design each, see the lumi research on [long-term incentives and share plans](/research/ltip-share-plans-2026) and on [allowances, company cars and benefits](/research/allowances-cars-benefits-2026).

## Is spending above the market a problem?

No. Above the market is not waste if the employer meant to lead. An employer that runs a share plan to hold its senior team is above the market by design.

The figure asks one question: is it on purpose?

**◆ Decision: what to do with a benefit that sits above the market and reaches few employees**
- *Keep it, on purpose.* The benefit holds people the organisation needs. The cost is known and owned. Trade-off: it stays outside what most employees see as their package.
- *Review who is eligible.* The spend stays; more employees feel it. Trade-off: a wider plan costs more, or pays each person less.
- *Move the spend.* Bring the benefit to the peers' usual level and put the difference where the same employer is below the market. Trade-off: the people who hold the benefit now lose something they were promised or expect.

Which is right depends on what the benefit was for. The data does not say.

## Where is the same employer below the market?

On most benefits. The middle employer is below the market on 85 of the 133 benefits compared, and on 3 of the 7 benefits lumi rates highest.

So the figure on this page is one side of a package. It is not a sign that an employer spends too much overall.

## What can the figure not tell you?

- **It is not your figure.** Headcount cannot know your package. Your own spend above the market could be nil.
- **It is the middle of a band.** Each band holds between 48 and 64 measured organisations. A median on that many can move when a few join or leave, so read the direction across the bands before the second decimal place.
- **The ratings and costs are lumi's model.** A different rating of what employees value would count different benefits.
- **It is not a random sample.** The organisations are in the lumi HR community.

## How can you see your own?

- Use the [calculator](/calculator) for a typical UK employer of your headcount and sector. It shows this figure beside what leavers cost to replace, and you can download the result.
- lumi members see their own position on each benefit, against a peer group they choose. [How lumi works](/methodology) explains the method.

## FAQ

**What percentage of payroll do UK employers spend above the market on benefits?**
In the lumi pool the middle employer spends 0.90% to 3.23% of payroll above its peers' usual level on benefits that reach few employees, depending on size (lumi pool, 12 November 2026, 270 measured) [1]. The figure is 2.49% for employers of 1,000 to 4,999 employees (n = 62).

**Do larger employers spend more above the market on benefits?**
Yes, on this measure. The share of payroll is higher in each larger size band, from 0.90% at 50 to 249 employees (n = 48) to 3.23% at 10,000 or more (n = 48) [1].

**Which benefits reach few employees?**
Long-term incentive or equity plans and status company cars make up more than half of the spend in this figure [1]. Both go to a small group of employees.

**Does spending above the market mean an employer is overspending?**
No. Above the market is not waste if the employer meant to lead, and the same employer is below the market on 85 of the 133 benefits compared [1].

**Is this my organisation's figure?**
No. It is the middle employer of your size in the lumi pool [1]. Headcount cannot know your package.

## Related

- [What is at stake at your size? The calculator](/calculator) — this figure for your headcount and sector, with a download.
- [What does it cost to replace an employee in the UK?](/guides/cost-of-replacing-an-employee-uk)
- [How to calculate the cost of staff turnover](/guides/how-to-calculate-cost-of-staff-turnover)
- [How lumi works: methodology](/methodology) — how the figures are collected and calculated.

## Sources

1. lumi pool, 12 November 2026: 270 measured, in five size bands. Shown in full on the [calculator](/calculator).
2. Office for National Statistics, *Annual Survey of Hours and Earnings 2026, provisional*, Table 4.7a: annual pay, gross, all employees, mean. https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/datasets/industry2digitsicashetable4

*This page is general information. It describes a typical employer, not yours, and it is not advice.*

**Want to see where your own package sits against UK employers like you?** [Book a call](https://lumihr.co.uk/book-a-call)