{"id":541,"date":"2025-04-03T02:42:42","date_gmt":"2025-04-03T01:42:42","guid":{"rendered":"https:\/\/guide.no-worries.co.uk\/?post_type=ht_kb&#038;p=541"},"modified":"2025-04-03T03:01:25","modified_gmt":"2025-04-03T02:01:25","slug":"employment-allowance-2025-26","status":"publish","type":"ht_kb","link":"https:\/\/guide.no-worries.co.uk\/index.php\/knowledge-base\/employment-allowance-2025-26\/","title":{"rendered":"The Employment Allowance 2025\/26"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\">The Employment Allowance is available which can help reduce your employer Class 1 National Insurance contributions (NICs)<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The Employment Allowance can significantly reduce the amount of Employer&#8217;s Class 1 National Insurance Contributions (NICs) your business pays each tax year. For the 2025\/26 tax year, this allowance has increased substantially, making it potentially more beneficial for eligible businesses.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Key Changes for 2025\/26:<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Allowance Amount: The Employment Allowance has risen from \u00a35,000 to \u00a310,500.<\/li>\n\n\n\n<li>Employer NIC Rate: Employer NIC rate has increased from 13.8% to 15%.<\/li>\n\n\n\n<li>Secondary Threshold: The employer NIC threshold has reduced from \u00a39,100 to \u00a35,000.<\/li>\n\n\n\n<li>Eligibility Threshold Removed: The previous eligibility condition (employer NICs below \u00a3100,000 in the previous tax year) has been removed. More businesses now qualify.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"are-you-eligible\">Are you eligible<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The Employment Allowance is available to most companies with two or more employees paid above the Class 1 National Insurance secondary threshold (\u00a35,000 per year).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, certain important restrictions apply:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Single-Director Companies: Companies where only one employee is paid above the secondary threshold, and that employee is also the director, are not eligible.<\/li>\n\n\n\n<li>Connected Companies: If your company is part of a group (connected companies), only one company in the group can claim the allowance.<\/li>\n\n\n\n<li>Excluded Employees: The allowance cannot be claimed for workers within IR35 rules or for personal, household, or domestic employees (except care or support workers).<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how-to-do-it\">How to Claim the Employment Allowance<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">To benefit from this allowance, your company needs to:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Pay salaries at a level attracting Employer\u2019s NIC (above \u00a35,000 per year per employee).<\/li>\n\n\n\n<li>Submit a claim each year through your payroll software. This is <strong>not automatic<\/strong>, and the allowance must be actively claimed every tax year.<\/li>\n\n\n\n<li>Once claimed, your payroll software will automatically deduct the allowance from the Employer\u2019s NIC liabilities throughout the year until the full \u00a310,500 is used.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">How We Can Help<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">As part of our comprehensive accounting service, we can manage all necessary filings and bookkeeping on your behalf. We will:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Ensure your Employment Allowance claim is filed correctly and promptly each tax year.<\/li>\n\n\n\n<li>Accurately calculate your Employer NIC liabilities and inform you quarterly of any payments due.<\/li>\n\n\n\n<li>Provide detailed payroll instructions, ensuring your salary payments match payroll records exactly.<\/li>\n\n\n\n<li>Help you avoid penalties by ensuring timely and correct payments to HMRC.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-is-involved\">Considerations and Potential Pitfalls<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>While beneficial, claiming the Employment Allowance increases payroll administration. Ensure you can manage this or rely on professional support.<\/li>\n\n\n\n<li>Your overall tax position, including income from dividends, other employment, or investments, may affect the net tax advantage of claiming this allowance.<\/li>\n\n\n\n<li>Consult with our team if you have additional income sources or taxable benefits to ensure claiming the allowance remains beneficial.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"other-issues\">Summary<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">For most single-director contractor companies, the Employment Allowance is typically not applicable or beneficial. However, for eligible multi-director or multi-employee companies, the increased allowance of \u00a310,500 presents a valuable opportunity for reducing your employer NIC costs.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We encourage you to consider your specific circumstances carefully and reach out to us with any questions or for assistance in managing your payroll effectively.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Employment Allowance is available which can help reduce your employer Class 1 National Insurance contributions (NICs) The Employment Allowance can significantly reduce the amount of Employer&#8217;s Class 1 National Insurance Contributions (NICs) your business pays each tax year. For the 2025\/26 tax year, this allowance has increased substantially, making&#8230;<\/p>\n","protected":false},"author":1,"comment_status":"open","ping_status":"closed","template":"","format":"standard","meta":{"footnotes":""},"ht-kb-category":[35],"ht-kb-tag":[],"class_list":["post-541","ht_kb","type-ht_kb","status-publish","format-standard","hentry","ht_kb_category-2025-26-tax-guides"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Employment Allowance 2025\/26 | No Worries Help Centre<\/title>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Employment Allowance 2025\/26 | No Worries Help Centre\" \/>\n<meta property=\"og:description\" content=\"The Employment Allowance is available which can help reduce your employer Class 1 National Insurance contributions (NICs) The Employment Allowance can significantly reduce the amount of Employer&#8217;s Class 1 National Insurance Contributions (NICs) your business pays each tax year. 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