Employment Allowance 2026/27 — Who's Eligible & How to Claim

Most employers with at least one employee (other than the director) can claim Employment Allowance. Eligible organisations include:

• Limited companies with employees
• Sole traders with employees
• Partnerships with employees
• Charities
• Community amateur sports clubs (CASCs)
• Businesses of any size (the £100k cap has been removed)

• Single-director companies with no other employees — if you are the only employee and also a director, you cannot claim
• Public bodies and organisations carrying out functions of a public nature (e.g., NHS trusts, local authorities)
• Domestic employers (e.g., employing a nanny or au pair in your home)
• Employers who have exceeded the de minimis state aid limit (generally €300,000 over 3 years for most sectors)

Connected Companies

If your business is part of a group of connected companies, only one company in the group can claim Employment Allowance. Connected companies share the single allowance — it cannot be split between them.

Companies are connected if one controls the other, or if both are controlled by the same person or group.

Number of Employees	Average Salary	Total NI Bill	After EA (£10,500)	Saving
1	£25,000	£3,000	£0	£3,000
3	£25,000	£9,000	£0	£9,000
5	£25,000	£15,000	£4,500	£10,500
5	£35,000	£22,500	£12,000	£10,500
10	£30,000	£37,500	£27,000	£10,500
20	£30,000	£75,000	£64,500	£10,500

Businesses with fewer employees and lower salaries benefit proportionally more, as the allowance covers a larger share of their total NI bill.

Step 1: Check Eligibility

Confirm you meet the criteria above. If you're a director-only company, you do not qualify. If you're part of a connected group, agree which company will claim.

Step 2: Claim Through Payroll Software

Employment Allowance is claimed through your payroll software (or your payroll provider) as part of your Employer Payment Summary (EPS). You tick a box to indicate you are claiming, and the software automatically applies the allowance against your NI liability.

Step 3: Claim at the Start of Each Tax Year

You must claim Employment Allowance each tax year — it does not carry forward automatically. The claim can be made from your first payroll run of the tax year (April onwards). It is applied on a month-by-month basis until the £10,500 is used up.

Step 4: Monitor and Adjust

Keep track of how much allowance you have remaining. Your payroll software should do this automatically, reducing your NI payment each month until the full £10,500 has been used.

Employment Allowance counts as de minimis state aid under UK subsidy control rules. The general limit is €300,000 (approximately £260,000) over a rolling 3-year period.

For most small and medium businesses, this is unlikely to be an issue. However, if you receive other forms of state aid (grants, subsidised loans, etc.), you should check whether claiming Employment Allowance would push you over the limit.

Some sectors have different de minimis limits — agriculture and fisheries, for example, have lower thresholds. Check with your accountant if you're unsure.

Employment Allowance can be combined with other NI reliefs:

• Under-21 and apprentice relief: you can claim the higher threshold for young workers AND Employment Allowance. The EA applies to your remaining NI bill after the age-related relief
• Veterans relief: employers hiring qualifying veterans get zero employer NI for the first 12 months, reducing the NI bill that the Employment Allowance needs to cover
• Freeport relief: businesses in designated Freeport areas can benefit from zero employer NI on new hires alongside Employment Allowance

Can I claim if I only have one employee?

Yes, as long as that employee is not also the sole director. If you have one director and one other employee, you can claim.

What if my NI bill is less than £10,500?

You simply pay no employer NI for the year. The unused portion of the allowance is not refundable and cannot be carried forward to the next year.

Can I backdate a claim?

You can claim Employment Allowance at any point during the tax year, and it will be applied retrospectively to the start of the year. You can also claim for previous tax years by contacting HMRC (up to 4 years back).

In 2025/26, Employment Allowance was £10,500 — the same amount as 2026/27. However, from April 2025, the employer NI rate increased from 13.8% to 15% and the secondary threshold was cut from £9,100 to £5,000. This meant that while the allowance amount stayed the same, the underlying NI bills it offsets grew significantly. For many small businesses, the Employment Allowance covered a smaller share of a larger total NI liability in 2025/26 than in the previous year when the rate was 13.8%.

If you are looking for the 2025/26 rates specifically: employer NI was 15% above £5,000/year, Employment Allowance was £10,500, and there was no employer NI liability cap to claim. These figures are unchanged for 2026/27. The rate table below applies to both years.

Feature	2025/26	2026/27
Employment Allowance	£10,500	£10,500
Employer NI rate	15%	15%
Secondary Threshold	£5,000/yr	£5,000/yr
NI liability cap to claim EA	None	None