Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to £5,000.
You’ll pay less employers’ Class 1 National Insurance each time we run your payroll until the £5,000 has gone or the tax year ends (whichever is sooner).
You can only claim against your employers’ Class 1 National Insurance liability up to a maximum of £5,000 each tax year. You can still claim the allowance if your liability was less than £5,000 a year.
While most smaller employers are eligible to claim the allowance, there are exceptions. The main two are where:
- a business’ employers’ Class 1 NI liability in the previous tax year exceeded £100,000; and
- companies have only one employee and that person is a director.
Who cannot claim Employment Allowance
You cannot claim if you’re a public body or business doing more than half your work in the public sector (such as local councils and NHS services) – unless you’re a charity.
How to claim
The Employment Allowance is given by allowing employers to keep the first £5,000 of any employers’ NI due instead of paying it over to HMRC via PAYE monthly or quarterly payment.