You could get up to £3,000 a year off your National Insurance bill if you’re an employer.
What you’ll get
The allowance will reduce your employers’ (secondary) Class 1 National Insurance each time you run your payroll until the £3,000 has gone or the tax year ends (whichever is sooner).
You can only claim against Class 1 National Insurance you’ve paid, up to a maximum of £3,000 each tax year. You can still claim the allowance if you pay less than £3,000 a year.
You can claim Employment Allowance if you’re a business or charity (including community amateur sports clubs) paying employers’ Class 1 National Insurance.
You can also claim if you employ a care or support worker.
If you have more than one employer PAYE reference, you can only claim Employment Allowance against one of them.
If you’re part of a group, only one company or charity in the group can claim the allowance.
You can’t claim if:
- you’re the director and the only employee paid above the Secondary Threshold
- you employ someone for personal, household or domestic work (like a nanny or gardener) - unless they’re a care or support worker
- 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’re a service company working under ‘IR35 rules’ and your only income is the earnings of the intermediary (such as your personal service company, limited company or partnership)
How to claim
If you use HMRC’s Basic PAYE Tools:
Select the correct name in the ‘Employer’ menu on the home page.
Select ‘Change employer details’.
Select ‘Yes’ in the ‘Employment Allowance indicator’ field.
Send your EPS as normal.
You only need to claim Employment Allowance once. Your claim will continue until you stop it.
Stopping your claim
If you stop being eligible, select ‘No’ in the ‘Employment Allowance indicator’ field in your next EPS.
Don’t select ‘No’ just because:
- you’ve reached the £3,000 limit before the end of the tax year - this doesn’t make you ineligible
- you’re no longer employing anyone - wait until the next tax year, then select ‘No’
If you stop your claim before the end of the tax year (5 April), any allowance you’ve been given that year will be removed. You’ll have to pay any employers’ Class 1 National Insurance due as a result.
When to claim
You can claim at any time in the tax year.
If you claim late and don’t use your Employment Allowance against the Class 1 National Insurance you’ve paid, 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 don’t owe anything on your PAYE bill)
- give you a refund after the end of the tax year if you don’t owe anything
You can see how much Employment Allowance you’ve used in your HMRC online account.
You can claim a £2,000 Employment Allowance for a previous tax year, dating back to 2014 to 2015 if you’re a business or charity - read ‘Claiming Employment Allowance: further employer guidance’ for more information.