The Employment Allowance: cutting your employer's NI

What the allowance does

The Employment Allowance reduces the employer's National Insurance a business pays, up to an annual cap, until the allowance is used up. You claim it through your payroll software, and it simply reduces the employer's NI you hand over each month until exhausted.

Who can claim

Most businesses and charities with employees can claim, subject to eligibility rules — including a cap on the connected-companies' previous employer's NI in some years. If you employ staff and pay employer's NI, check whether you qualify, because the saving is worth claiming every year.

The single-director trap

A company where the only employee paid above the NI threshold is a single director generally cannot claim the allowance. This catches many one-person companies who assume they qualify. Bringing a second employee above the threshold can change eligibility — but do that for business reasons, not just the allowance.

Claiming it correctly

You claim through your payroll each tax year — it does not roll over automatically in all cases, so confirm the claim is active. If you missed it in prior years you may be able to claim back within the time limits, which can free up real cash.

Where the saving helps

Reducing employer's NI directly improves cash flow for a business carrying a payroll. Combine it with careful payroll setup to keep costs tight.

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