Employment Allowance 2026/27: Save Up to £10,500 on Employer NI
The Employment Allowance is a valuable tax relief that allows eligible employers to reduce their annual Employer National Insurance bill. For 2026/27, the allowance has been significantly increased to £10,500.
Key Facts for 2026/27
| Detail | 2026/27 |
|---|---|
| Maximum allowance | £10,500 |
| Effective from | 6 April 2026 |
| Class 1A/1B eligible | No (Class 1 only) |
| Carry forward unused | No |
Who Can Claim Employment Allowance?
Eligible Employers
You can claim if:
- You are an employer with at least one employee
- Your Class 1 NI liability was under £100,000 in the previous tax year
- You are not a public body or company with 51%+ public sector ownership
Who Cannot Claim
- Single-director companies with no other employees
- Employers with Class 1 NI liability over £100,000 in previous year
- Public sector organisations
- Domestic workers (nannies, au pairs) employed directly by households
How to Claim
For New Claims
- Log in to your HMRC online account
- Go to your PAYE service
- Select "Claim Employment Allowance"
- Confirm eligibility
Or inform your payroll software/provider to claim on your behalf.
Through Payroll Software
Most payroll software includes an option to claim Employment Allowance. Check the settings in your software to enable the claim.
How It Works
The Employment Allowance reduces your Employer Class 1 NI liability throughout the year:
Example:
- Annual Employer NI bill: £8,000
- Employment Allowance: £8,000 (limited to actual liability)
- NI to pay: £0
Another Example:
- Annual Employer NI bill: £15,000
- Employment Allowance: £10,500 (maximum)
- NI to pay: £4,500
2026 Changes: £10,500 Allowance
The Employment Allowance more than doubled from £5,000 to £10,500 in April 2025. This means:
- Small employers with NI bills up to £10,500 pay nothing
- The relief is worth up to £10,500 per year
- More businesses qualify with the increased cap
Frequently Asked Questions
Can I claim if I'm the only director with no employees?
No. Single-director companies without any other employees are specifically excluded from claiming Employment Allowance.
Do I need to claim every year?
Yes. You need to confirm your eligibility and claim the allowance each tax year. Most payroll systems prompt you to do this.
What if my NI bill is less than £10,500?
You receive the allowance up to your actual Employer NI liability. If your bill is £6,000, you claim £6,000 (not £10,500).
Can I backdate a claim?
You can correct a missed claim for up to 4 years. Contact HMRC or submit amended EPS returns.
Related Calculators
- Employer NI Calculator - Calculate your employer NI bill
- Take Home Pay Calculator - Full employee tax breakdown
- Salary Calculator - Calculate employment costs