What it does
The Employment Allowance reduces your employer (secondary) Class 1 National Insurance by up to £10,500 across the tax year. You keep claiming it against your employer NI each pay period until the allowance is used up — real money off the cost of employing people.
The single-director exclusion
The catch for owner-managers: if the only person paid above the secondary NI threshold is a single director, the company can’t claim. The allowance is designed for businesses employing people beyond just the owner — so you generally need at least one other employee earning above the threshold to qualify. Take on your first employee and the position can change.
Who else is (and isn't) eligible
- Most businesses and charities with employer Class 1 NI can claim
- Not if more than half your work is in the public sector (charities excepted)
- Connected companies share a single allowance between them
- Eligibility should be checked each year — rules and your staffing change
How to claim
You claim through payroll by submitting an Employer Payment Summary (EPS) confirming eligibility; it then reduces your employer NI payments through the year. It’s easy to miss if your payroll isn’t set up for it — which is money left on the table.
Don't overpay employer NI
If your company qualifies, we make sure the Employment Allowance is claimed correctly through payroll so you don’t hand HMRC more than you owe. Call 0114 327 1480.