From 6 April 2025, more employers can claim the increased £10,500 Employment Allowance, thanks to a change to the eligibility rules. This increase may help employers reduce some of the impact of the recent increases in employers’ NIC.

The Employment Allowance allows eligible employers to reduce their Class 1 National Insurance contributions by up to £10,500 per year, increased from £5,000 previously.  It cannot be used against Class 1A or Class 1B NICs liabilities and can only be claimed once across all employer’s PAYE schemes or connected companies.

Employment allowance claims need to be re-submitted each tax year and can also be claimed if your liability is less than £10,500.

It is worth noting that there are a number of excluded categories where employers cannot claim the allowance, such as:

•   limited companies with a single director and no other employees
•   employees whose earnings are within IR35 ‘off-payroll working rules’
•   or someone you employ for personal, household or domestic work (unless they are a carer or support worker).

For more information on claiming Employment Allowance or any other tax or accounting questions, please get in touch.
 
Internet link: HMRC guidance