Answers · UK 2025/26
What is the Employment Allowance limit in the UK for 2026/27?
The Employment Allowance for 2026/27 is £10,500 per year. It allows eligible businesses to reduce their employer National Insurance bill by up to £10,500 annually. It was increased from £5,000 in April 2025. Companies where the sole director is the only employee cannot claim it.
Full answer
The Employment Allowance reduces the amount of employer National Insurance (Class 1) contributions a business pays to HMRC each year. Key facts for 2026/27: - Allowance: £10,500 per year - This is an increase from £5,000 (which applied to 2024/25), raised to £10,500 from 6 April 2025. - Claimed via Real Time Information (RTI) payroll submissions -- mark "yes" to the Employment Allowance indicator. Who can claim: - Businesses and charities with employer NI liabilities below £100,000 in the previous tax year. - Businesses with more than one employee. - Charities and Community Amateur Sports Clubs (CASCs) regardless of employer NI threshold. Who cannot claim: - Companies where the only employee is also the sole director. - Public bodies (local authorities, NHS) unless they employ care workers. - Businesses connected to another business that has already claimed Employment Allowance (connected companies share a single allowance). - Businesses that use off-payroll workers (IR35) are subject to separate rules. How it is applied: - The allowance is applied against employer NI as it arises each month/week. - If your total employer NI for the year is less than £10,500, you benefit by the full amount of employer NI -- you effectively pay none. - Unused allowance at year end cannot be carried forward. Connected companies: - If businesses are under common ownership or control, the £10,500 must be shared between them -- only one entity in the group may claim it.
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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.