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

You’ll pay less employers’ 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 employers’ 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.

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

• you’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: 

• you’re a charity (including community amateur sports clubs)
• you employ a care or support worker, for example, to care for someone with a mental or physical disability

Employees you cannot include in your claim

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

• someone whose earnings are within IR35 ‘off-payroll working rules’

• someone you employ for personal, household or domestic work (like a nanny or gardener) - unless they’re a carer or support worker

If you’re part of a group

If you’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.

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

To claim, your employers’ 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 you’re a public body or business doing more than half your work in the public sector (such as local councils and NHS services) - unless you’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:

• someone whose earnings are within IR35 ‘off-payroll working rules’
• someone you employ for personal, household or domestic work (like a nanny or gardener) - unless they’re a care or support worker

If you’re part of a group

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

If you have more than one payroll

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

If you made off-payroll payments

Payments to off-payroll workers (for example, contractors) are known as ‘deemed payments’. Do not include employers’ 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 ‘de minimis state aid’ (financial support from the government). There’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 you’re below the de minimis state aid limit

The limit depends on your business sector. It’s worked out in euros.

Sector	De minimis state aid limit over 3 years
Agriculture products 	20,000 euros
Fisheries and aquaculture 	30,000 euros
Road freight transport	100,000 euros
±õ²Ô»å³Ü²õ³Ù°ù¾±²¹±ô /´Ç³Ù³ó±ð°ù	200,000 euros

Work out how much de minimis state aid you’ve received

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

2. Add the total amount you’ve received for the tax year you’re claiming for and the two tax years before this.

3. Add this to the full amount of Employment Allowance for the year you’re claiming for. You’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, you’re eligible to make a claim.

If you’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.

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 employers’ Class 1 National Insurance liabilities, you’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 you’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 ‘Claiming Employment Allowance: further employer guidance’ for more information.

How you claim depends on whether you use your own payroll software or HMRC’s Basic PAYE tools.

If you use your own software

To claim through your payroll software, put ‘Yes’ in the ‘Employment Allowance indicator’ 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 HMRC’s Basic PAYE Tools.

If you’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 ‘Industrial/other’ category, for example a hair salon or restaurant.

If this is not true for you, select ‘No’ in response to ‘Do state aid rules apply?’

If you use HMRC’s Basic PAYE Tools

If you’re claiming for the current tax year

1. Select the correct name in the ‘Employer’ menu on the home page.  

2. Select ‘Employment Allowance’. 

3. Check the eligibility criteria.

4. Send your EPS as normal.

If you’re claiming for a previous tax year

1. Select the correct name in the ‘Employer’ menu on the home page.  

2. Select ‘Employment Allowance’. 

3. Check the eligibility criteria.

4. Answer ‘Yes’ to the question ‘Do state aid rules apply?’ if de minimis state aid rules apply to you. Then select the business sectors that apply to you. Otherwise, answer ‘No’. 

5. Send your EPS as normal.

Stopping your claim

If you stop being eligible, select ‘No’ in the ‘Employment Allowance indicator’ field in your next EPS.

Do not select ‘No’ just because:

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

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 you’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.