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Making the most of the Employment Allowance

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National Insurance

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6 August 2026

The Employment Allowance can reduce eligible employers' National Insurance costs by up to £10,500 each tax year. Discover who can claim, who cannot, how to submit your claim through payroll, and how to backdate up to four years.

Making the most of the Employment Allowance

The Employment Allowance helps eligible employers cut their National Insurance costs. Indeed, it can save up to £10,500 each tax year. The allowance reduces an employer’s Class 1 National Insurance liability. Moreover, payroll applies it automatically once you make a valid claim.

Who can claim

Most businesses can claim this allowance. However, you must not carry out more than half of your work in the public sector. Generally, public sector bodies cannot claim it. In addition, charities may qualify, including community amateur sports clubs. Similarly, employers of care or support workers may also benefit.

Furthermore, the old £100,000 restriction disappeared from April 2025. Previously, this cap applied to employers’ Class 1 National Insurance liabilities. As a result, more employers can now benefit from the allowance.

Who cannot claim

Nevertheless, some employers still cannot claim. For example, take a company with a sole director. That director might be the only employee liable for secondary Class 1 National Insurance. In that case, the company cannot claim.

Additionally, you cannot claim the allowance for certain employees. These include:

workers caught by the off-payroll working rules
people employed for personal or domestic work, unless they provide care or support

How to make a claim

You must claim the allowance each tax year. Therefore, claiming early always makes sense. The sooner you claim, the sooner you save against payroll costs. You make claims through your payroll software. Specifically, you submit an Employment Payment Summary (EPS) to HMRC.

Backdating your claim

Importantly, eligible employers can also look back. In fact, you can claim for the previous four tax years, subject to the relevant conditions. Consequently, it is always worth reviewing earlier years too.