Employment allowance
Description

The amount you can claim for employment allowance is £5,000.00 per tax year. If eligible, you use this to reduce your company's national insurance contributions.

The claimable value of £5,000.00 applies to the 2023/2024 tax year.

The previous Employment allowance was £4,000, which changed in April 2022.

You can no longer claim employment allowance if:
  • Your company's Class 1 national insurance (NI) bill was £100,000 or more in the previous tax year

Employment allowance counts as a type of State Aid. This is because it can place some businesses in a better position over others. This could then affect competition and trade.

Cause
Resolution

What does this mean?

Over 99% of micro-businesses and 93% of small businesses can still claim the allowance. 

 Regardless of the size of your company, you can’t claim the employment allowance if:

  • You’re the director and the only employee that’s paid above the secondary threshold
  • You employ someone for personal, household or domestic work. Unless they’re a care or support worker
  • You’re a public body or business doing more than half of your work in the public sector, unless you’re a charity
  • You’re a service company working. You're under IR35 rules, and your only income is the earnings of the intermediary

Get more information about employment allowance. Read the HMRC article Changes to Employment Allowance (opens in a new window)

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Also read our article I forgot to enter my Employment Allowance to date.