Glossary · UK
What is Employment Allowance (2026/27)?
A £10,500 annual reduction in employer Class 1 NI liability available to eligible smaller employers.
Full Definition
The Employment Allowance allows eligible employers to reduce their annual employer National Insurance Contributions (Class 1) liability by up to £10,500 in 2026/27, increased from £5,000 in the previous year following the October 2024 Autumn Budget. It is claimed through payroll software or PAYE. Employers are eligible if their total employer NI bill was under £100,000 in the previous tax year; sole director limited companies with no other employees cannot claim. The allowance applies against the employer NI due each month until the £10,500 is used or the tax year ends. Public bodies and those who employ someone for personal household work are generally excluded. Charities and small businesses with multiple payrolls can only claim once.