Payroll Help

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.