Answers · UK 2025/26
What is the Employment Allowance for 2026/27 and who is eligible?
The Employment Allowance for 2026/27 is £10,500 per year, increased from £5,000 in 2025/26. It reduces an employer's Class 1 National Insurance liability. Eligible employers include most businesses and charities. You cannot claim if your employer NI bill was £100,000 or more in the previous tax year, or if you are a sole director with no other employees.
Full answer
The Employment Allowance (EA) is a relief that reduces the amount of employer Class 1 NI a business or charity pays each month. For 2026/27, the EA is £10,500 per year -- an increase from £5,000 in 2024/25 and £10,500 maintained from when it was increased from April 2025. It is claimed through the payroll software or HMRC's Basic PAYE Tools by selecting "Yes" on the Employer Payment Summary (EPS). Eligible employers: businesses, charities, and community amateur sports clubs (CASCs) with a Class 1 NI liability. Ineligible employers: employers whose Class 1 NI liability was £100,000 or more in the previous tax year; sole directors who are the only employee of their company (no other employees paid above the secondary threshold); domestic employers (e.g., employing a carer at home unless they are a care or support worker employed by a personal budget holder); public authorities and bodies that mainly carry out functions of a public nature (with limited exceptions for charities). Connected employers: if two or more companies are connected (under the corporation tax definition of 51% group), they share a single £10,500 EA between them -- they must nominate one entity to claim it. The EA is available regardless of business size, as long as the £100,000 NI liability cap is met. Interaction with employment allowance and National Minimum Wage: the EA reduces the employer's NI cost but does not affect the amount the employer must pay employees. De minimis state aid: until April 2024, the EA was subject to EU de minimis state aid rules; following Brexit and UK subsidy control reforms, the EA now falls under the domestic subsidy control regime, which is less restrictive for most businesses. HMRC guidance: CWG5.
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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.