To Inform HMRC that the Employment Allowance will be claimed

2024/25 tax year

Employment Allowance: Employers can reduce their secondary Class 1 National Insurance Contributions (NICs) by up to £5,000.

Eligibility: Employers with a secondary Class 1 NICs liability of £100,000 or more in the wprior tax year are not eligible to claim the allowance.

2025/26 tax year and onwards

Employment Allowance Increase: From 1 April 2025, the Employment Allowance will increase to £10,500.

Eligibility Change: From 1 April 2025, the £100,000 eligibility threshold will be removed, meaning employers whose secondary Class 1 NICs liability was £100,000 or more in the prior tax year will be eligible to claim the allowance.

These changes are designed to provide more support to employers, especially larger ones, by increasing the allowance and removing the previous eligibility cap.

De-minimis State aid rules

Prior to the 2025/26 tax year, extra checks were required to ascertain a company’s eligibility for the Employment Allowance as it advantages some businesses over others, which potentially could distort competition and Trade within the European Union.

For the 2025/26 tax year, HMRC are responsible for ensuring compliance with the de-minimis state rules and advise that the State aid rules don’t apply option within the Employer Payment Summary is not selected.

From the 2026/27 tax year onwards, the State aid rules options have been removed from the Employer Payment Summary.

Companies where the director is the sole employee cannot claim the employment allowance.

Follow these steps when you are ready to send your Employer Payment Summary to HMRC for the tax month or quarter.

  1. Open the Payroll folder and then click HMRC Online Services or click the Payroll & HR tab on the Ribbon Bar and then click Payroll - HMRC Online Services.

  2. Click Employer Payment Summary.

  3. Complete page one as normal and click Next.

  4. On page two under Employment Allowance for 2025/26 (Tax Year) select the Starting to claim or already claiming for 2025/26 (Tax Year) option. When the Employer Payment Summary is submitted this signifies to HMRC that the allowance will be claimed.

  5. Click Start to submit the Employer Payment Summary.


- You only need to signify to HMRC once that you will be claiming the Employment Allowance, not each time you submit an Employer Payment Summary.

- You can claim the full allowance in a single month if your employer's NICs due exceeds the limit. You should enter the amount claimed for each month on the P32 Processing - Employment Allowance form.

- When you pay Income Tax and employer's and employees' National Insurance contributions to HMRC you must adjust your payment by the amount of the Employment Allowance you are claiming.