Claiming Employment Allowance

If you're eligible to claim Employment Allowance, notify HMRC that you're claiming it and track how much you've claimed.

Submit an Employer Payment Summary (EPS)

Employment allowance no longer counts as 'de minimis state aid'.

This means HMRC no longer requires state aid information when you submit your application. We've removed these options from Sage 50 Payroll v32.

Follow the steps below to complete your application.

1. Go to Payroll, then Change Process Date.
2. Ensure your process date is within the 2026/2027 tax year, then select OK.
3. Go to Company, then Settings.
4. Beside the Eligible for Employment Allowance checkbox, select the Submit button.
   • If this button is missing, you've already applied. If you need to submit another application, select Settings, then continue to Step 5
5. Select Continue then Submit.
6. Select Submit again, then allow the submission to complete.
7. Print the submission log if required, then select Close.

What happens next

At this stage, HMRC receives your EPS submission with the Employment Allowance application.

• If your application is unsuccessful, you receive a notification in your IR Secure Mailbox within five working days
• If you don't hear back from HMRC, your application has been successful. Select the Eligible for Employment Allowance checkbox within Company, then Settings

Once you select this checkbox, your software calculates your Employment Allowance when you run the P32 each month.

Once HMRC approves your application, they automatically calculate your Employment Allowance based on the values you've already submitted for each period.

This means that after you follow the steps above and re-run your P32's, the values in Sage 50 Payroll and your HMRC account match.

Enabled after month one

Sometimes, you select the Eligible for Employment Allowance checkbox after you process one or more tax months. For example, you forgot to apply before month one.

When this happens, your software didn't calculate any allowance for any tax months before you enabled it. To correct this, re-run the P32 for each month, starting from month one. Your software then calculates the Employment Allowance due in each period.

Post your Employment Allowance into Sage 50 Accounts

Your software doesn't post employment allowance if you use the Nominal Link option. To reconcile your accounts, create a manual journal to reduce the total NI on your balance sheet nominal code.

For help with doing this, follow our post the employment allowance value in your accounts article.

Multiple PAYE schemes

If you're eligible for Employment Allowance and your business has multiple PAYE schemes, you can only claim for one of them.

You need to claim for the PAYE scheme with the most allowance. To do this, pick a scheme where you think your employer's Class 1 NI liability will meet the annual Employment Allowance amount. This is currently £5000. Then advise HMRC which scheme you're claiming Employment Allowance for.

Employees not included in Employment Allowance

If an employee's status as 'Deemed', your software excludes them from your Employment Allowance calculations under off-payroll working rules (IR35).

If you employ someone for personal, household, or domestic work, use a specific PAYE scheme for this, without Employment Allowance enabled.

To find out more about exclusions, visit Gov.UK.

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