What is Employment Allowance?

The Employment Allowance can be claimed by eligible businesses up to a maximum of £5,000 per year.

Who may be eligible for the Employment Allowance?

You can claim the Employment Allowance if you are a business or charity (including Community Amateur Sports Clubs) that pays employer Class 1 NICs on your employees’ or directors’ earnings. 

There are some exclusions to be aware of though, such as:

• your company has connected companies or charities that are already claiming the Allowance
• you are a public authority or you have a public nature (unless you are a registered charity)
• larger companies where the total National Insurance liability is more than £100,000.

You also cannot claim if both of the following apply: 

• You are a company with only one employee paid above the Class 1 National Insurance secondary threshold  
• the employee is also a director of the company 

For further details on eligibility, please see the HMRC guidance which may be found here. 

How to make your claim

You can use your own payroll software or HM Revenue & Customs’ Basic PAYE Tools, to claim the Employment Allowance.

If your accountant or payroll bureau prepares your payroll for you, they should take care of claiming the Allowance, but it’s worth double-checking with them.

If you would like to know more about Employment Allowance or would like assistance with your payroll call 01451 824 094 or use our online contact form to arrange a meeting.

Date published 2 Mar 2014 | Last updated 29 May 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.