What is Employment Allowance? It's an employer benefit that reduces your employer's National Insurance liability. Employment Allowance increased to £10,500 per year from 6 April 2025. To find out more about legislation for the 2025/2026 tax year, visit the payroll legislation for the 2025/2026 tax year article. Also from 6 April 2025, there's no longer a cap of £100,000 Employers NI to be eligible. This means employers with liability above £100,000 for the prior tax year are eligible for employment allowance in 2025/2026. With Employment Allowance, each time you run your payroll you pay less employers’ Class 1 National Insurance. This continues until you've used the full allowance for the tax year, or until the tax year ends, whichever is sooner.  CAUTION: If you claim Employment Allowance, you must apply again at the start of each tax year. It doesn't carry over between tax years automatically.
Check you're eligible If you're not sure whether your business is eligible, you can check using HMRC's guidance. Check HMRC guidance now  NOTE: HMRC no longer sends a confirmation letter for your Employment Allowance. If they reject your claim, you'll receive an automated message from HMRC within 5 working days.
Claim the allowance in your software
Is this the same as small employers' relief? No, this benefit is different to small employers' relief (SER), you could be eligible to claim this too. Use our what is Small Employers' Relief article if you'd like to find out more and check if you're eligible.
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