Employment Allowance

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1. What you'll get

Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to £10,500.

You바카라 사이트™ll pay less employers바카라 사이트™ Class 1 National Insurance each time you run your payroll until the £10,500 has gone or the tax year ends (whichever is sooner).

You can only claim against your employers바카라 사이트™ Class 1 National Insurance liability up to a maximum of £10,500 each tax year. You can still claim the allowance if your liability was less than £10,500 a year.

2. Check if you're eligible

You can claim Employment Allowance for the current tax year if both of the following apply:

  • you바카라 사이트™re a business or public body
  • you do less than half your work in the public sector (such as for local councils and NHS services)

If your company has only one director, they must not be the only employee liable for secondary Class 1 National Insurance.

You can also claim Employment Allowance if: 

From April 2025, Employers paying more than £100,000 in Class 1 National Insurance liabilities can apply for Employment Allowance. The rules are different if you claim for previous tax years.

Employees you cannot include in your claim

Certain employees cannot be included in your claim, such as:

If you바카라 사이트™re part of a group

If you바카라 사이트™re part of a group of charities or companies (also known as connected companies), only one company in the group can claim the allowance.

If you have more than one payroll 

You can only claim Employment Allowance against one of the payrolls.

3. Check if you can claim for previous years

You can claim Employment Allowance for the previous 4 tax years if you바카라 사이트™re a business or charity (including community amateur sports clubs). 

To claim, your employers바카라 사이트™ Class 1 National Insurance liabilities must have been less than £100,000 the previous tax year.

You can also claim if you employ a care or support worker, for example, to care for someone with a mental or physical disability.

Previous rates

Employment Allowance for the previous 4 tax years was:  

  • £5,000 each year between 6 April 2022 and 5 April 2025  

  • £4,000 each year between 6 April 2021 and 5 April 2022

Who cannot claim Employment Allowance

You cannot claim if you바카라 사이트™re a public body or business doing more than half your work in the public sector (such as local councils and NHS services) - unless you바카라 사이트™re a charity.

You also cannot claim if your company has just one director and that director is the only employee liable for secondary Class 1 National Insurance.

Employees you cannot include in your claim

Certain employees cannot be included in your claim, such as:

If you바카라 사이트™re part of a group

If you바카라 사이트™re part of a group of charities or companies (also known as connected companies), the total employers바카라 사이트™ Class 1 National Insurance liabilities for the group must have been less than £100,000 in the previous tax year.

Only one company in the group can claim the allowance.

If you have more than one payroll

If you have or had more than one employer PAYE reference, the total employers바카라 사이트™ Class 1 National Insurance liabilities for your combined payrolls must have been less than £100,000 in the previous tax year.

You can only claim Employment Allowance against one of the payrolls.

If you made off-payroll payments

Payments to off-payroll workers (for example, contractors) are known as 바카라 사이트˜deemed payments바카라 사이트™. Do not include employers바카라 사이트™ Class 1 National Insurance liabilities on deemed payments in your calculations. They do not count towards the £100,000 threshold.

Check if de minimis state aid limits apply to your business

For some businesses, Employment Allowance counts as 바카라 사이트˜de minimis state aid바카라 사이트™ (financial support from the government). There바카라 사이트™s a limit to how much de minimis state aid these businesses can get over a 3-year period. If they exceed the limit, they cannot claim Employment Allowance.

De minimis state aid limits are likely to apply to your business if both of the following are true:

  • your business is located in Northern Ireland
  • your business makes or sells goods or wholesale electricity

If de minimis state aid limits apply to your business, you must:

  • work out how much state aid you received in total
  • check that you were below the limit

You must do this even if your business does not make a profit.

Check you바카라 사이트™re below the de minimis state aid limit

The limit depends on your business sector. It바카라 사이트™s worked out in euros.

Sector De minimis state aid limit over 3 years
Agriculture products바카라 사이트¯ 20,000 euros
Fisheries and aquaculture바카라 사이트¯ 30,000 euros
Road freight transport 100,000 euros
Industrial바카라 사이트¯/other 200,000 euros

Work out how much de minimis state aid you바카라 사이트™ve received

  1. Check if you바카라 사이트™ve received any de minimis state aid - if so, you should have been told in writing.

  2. Add the total amount you바카라 사이트™ve received for the tax year you바카라 사이트™re claiming for and the two tax years before this.

  3. Add this to the full amount of Employment Allowance for the year you바카라 사이트™re claiming for. You바카라 사이트™ll need to convert this into euros using the exchange rate from 30 March of the previous tax year.

  4. If the total is below the limit for your sector, you바카라 사이트™re eligible to make a claim.

If you바카라 사이트™re a connected company, the total de minimis state aid for all of the companies in the group must be below the state aid limit for your sector.

The rules are different if your business covers more than one sector.

4. When to claim

You need to claim Employment Allowance every tax year.

You can claim at any time in the tax year, but the earlier you claim the sooner you will get the allowance.

If you claim late and do not use your Employment Allowance against your employers바카라 사이트™ Class 1 National Insurance liabilities, you바카라 사이트™ll have to ask HMRC to do one of the following:

  • use any unclaimed allowance at the end of the year to pay any tax or National Insurance you owe (including VAT and Corporation Tax if you do not owe anything on your PAYE bill)
  • give you a refund after the end of the tax year if you do not owe anything

You cannot claim a refund for the difference between your total employers Class 1 National Insurance liability, and the full amount of Employment Allowance for the tax year.

You can see how much Employment Allowance you바카라 사이트™ve used in your HMRC online account.

Claiming for past years

You may be able to claim Employment Allowance for the previous 4 tax years dating back to the 2021 to 2022 tax year.

Further information

Read 바카라 사이트˜Claiming Employment Allowance: further employer guidance바카라 사이트™ for more information.

5. How to claim

How you claim depends on whether you use your own payroll software or HMRC바카라 사이트™s Basic PAYE tools.

If you use your own software

To claim through your payroll software, put 바카라 사이트˜Yes바카라 사이트™ in the 바카라 사이트˜Employment Allowance indicator바카라 사이트™ field next time you send an Employment Payment Summary (EPS) to HM Revenue and Customs (HMRC).

If your payroll software does not have an Employment Payment Summary field, you can use HMRC바카라 사이트™s Basic PAYE Tools.

If you바카라 사이트™re claiming for a previous year

If the de minimis state aid rules apply to your business, you must select the business sectors that apply to you. You must do this even if you do not make a profit.

Most businesses will need to select the 바카라 사이트˜Industrial/other바카라 사이트™ category, for example a hair salon or restaurant.

If this is not true for you, select 바카라 사이트˜No바카라 사이트™ in response to 바카라 사이트˜Do state aid rules apply?바카라 사이트™

If you use HMRC바카라 사이트™s Basic PAYE Tools

If you바카라 사이트™re claiming for the current tax year

  1. Select the correct name in the 바카라 사이트˜Employer바카라 사이트™ menu on the home page.  

  2. Select 바카라 사이트˜Employment Allowance바카라 사이트™. 

  3. Check the eligibility criteria.

  4. Send your EPS as normal.

If you바카라 사이트™re claiming for a previous tax year

  1. Select the correct name in the 바카라 사이트˜Employer바카라 사이트™ menu on the home page.  

  2. Select 바카라 사이트˜Employment Allowance바카라 사이트™. 

  3. Check the eligibility criteria.

  4. Answer 바카라 사이트˜Yes바카라 사이트™ to the question 바카라 사이트˜Do state aid rules apply?바카라 사이트™ if de minimis state aid rules apply to you. Then select the business sectors that apply to you. Otherwise, answer 바카라 사이트˜No바카라 사이트™. 

  5. Send your EPS as normal.

Stopping your claim

If you stop being eligible, select 바카라 사이트˜No바카라 사이트™ in the 바카라 사이트˜Employment Allowance indicator바카라 사이트™ field in your next EPS.

Do not select 바카라 사이트˜No바카라 사이트™ just because:

  • you바카라 사이트™ve reached the £10,500 limit before the end of the tax year - this does not make you ineligible
  • you바카라 사이트™re no longer employing anyone - this allowance will stop at the end of the tax year

If you stop your claim before the end of the tax year (5 April), any allowance you바카라 사이트™ve been given that year will be removed. You바카라 사이트™ll have to pay any employers바카라 사이트™ (secondary) Class 1 National Insurance due as a result.

6. After you've made a claim

You can begin using your Employment Allowance as soon you submit your claim.

HM Revenue and Customs (HMRC) will not send you a confirmation letter for your Employment Allowance.

If your claim is rejected, you will receive an automated message from HMRC within 5 working days.

When your Employment Allowance counts as de minimis state aid

If you바카라 사이트™re claiming for a previous tax year and have selected a business sector in your claim, HMRC will send you a letter. This will state that your Employment Allowance counts as de minimis state aid.

You must keep this letter as you may need it if you apply for other de minimis state aid.