Answers · UK 2025/26
What is the Employment Allowance in 2026/27?
The Employment Allowance is £10,500 in 2026/27. It reduces the amount of employer Class 1 NI that eligible businesses pay to HMRC each tax year.
Full answer
The Employment Allowance allows eligible employers to reduce their employer National Insurance Contributions (NICs) by up to £10,500 per year in 2026/27, increased from £5,000 in 2024/25. The allowance is claimed through payroll software and reduces the Class 1 employer NI liability each pay period until the annual limit is reached. To qualify, your employer Class 1 NI liability must have been less than £100,000 in the prior tax year. Connected companies (those under common control) can only claim once between them. The allowance cannot be used to offset employee NI, PAYE income tax, or VAT. Sole directors who are the only employee of their company cannot claim. Domestic employers (paying a nanny or carer) are also excluded. The allowance was increased as part of Budget 2024 measures alongside the rise in employer NI rates to 15%.
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.