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HMRC internal manual

National Insurance Manual

Employment Allowance: Who can’t claim the Employment Allowance? Public authorities

National Insurance Contributions Act 2014 - Section 2, subsections (1) to (2)

An employer cannot qualify for the Employment Allowance for a tax year if at any time during that tax year that employer is a public authority which is not a charity (as defined within the Small Charitable Donations Act 2012).

For this purpose, a public authority includes any employer whose activities wholly or mainly (i.e. 50% or more), involve the performance of functions (whether or not in the UK) which are of a public nature. Public authorities can commonly be:

  • local councils
  • town councils and parish councils
  • health authorities

The above list is not exhaustive.

Examples of functions of a public nature.

  • NHS services,
  • general practitioner (GP) services where NHS patients take up the majority of a GP’s work.
  • provision of meals on wheels by a local authority,
  • prison services, (includes private contractors whose functions mainly consist of guarding prisoners on behalf of the government).
  • refuse collection on behalf of a public authority,
  • debt collection on behalf of a public authority.
  • managing housing stock formerly owned by the local authority and on behalf of the local authority.


Examples of functions provided to a public body that are not of a public nature:

  • provision of security or cleaning for a public building, such as government or local authority offices
  • the supply of IT services to a government department or local authority
  • independent pharmacies that include dispensing NHS prescriptions as part of their business


Registered charities that are mainly undertaking functions of a public nature can still claim the Employment Allowance, subject to the application of the connected rules for charities applying. (See NIM06620.)