Answers · UK 2025/26
What is the UK Employment Allowance?
The Employment Allowance lets eligible UK employers reduce their Class 1 employer NI bill by up to £10,500/year (raised from £5,000 in April 2025). Single-director companies and IR35 deemed employees are excluded.
Full answer
UK Employment Allowance 2025/26. Amount: up to £10,500/year (raised from £5,000 on 6 April 2025) — offsets employer Class 1 secondary NIC. Eligibility — UK employer who: pays Class 1 secondary NICs on ≥1 employee; NOT a public body or 50%+ public-body work; NOT a single-director company where the director is the only employee paid above ST (£5,000); NOT involved in tax avoidance. Solution for sole-director: hire spouse paid above ST. IR35 deemed: engager's NIC cannot use the allowance. Claim via payroll software RTI submission box. Net effect of April 2025 changes: small employers roughly cost-neutral (allowance doubled offsets rate rise); large employers significantly higher costs.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.