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Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to 拢5,000.

You鈥檒l pay less employers鈥� Class 1 National Insurance each time you run your payroll until the 拢5,000 has gone or the tax year ends (whichever is sooner).

You can only claim against your employers鈥� Class 1 National Insurance liability up to a maximum of 拢5,000 each tax year. You can still claim the allowance if your liability was less than 拢5,000 a year.

You can claim Employment Allowance if you鈥檙e a business or charity (including community amateur sports clubs) and your employers鈥� Class 1 National Insurance liabilities were less than 拢100,000 in the previous tax year.

You can also claim if you employ a care or support worker.

If you鈥檙e part of a group

If you鈥檙e part of a group of charities or companies (also known as connected companies), the total employers鈥� Class 1 National Insurance liabilities for the group must be less than 拢100,000.

If you have more than one payroll

If you have or had more than one employer PAYE reference, the total employers鈥� Class 1 National Insurance liabilities for your combined payrolls must be less than 拢100,000 in the previous tax year.

If you make off-payroll payments

Payments to off-payroll workers (for example, contractors) are known as 鈥榙eemed payments鈥�. Do not include employers鈥� Class 1 National Insurance liabilities on deemed payments in your calculations. They do not count towards the 拢100,000 threshold.

Check if de minimis state aid limits apply to your business

For some businesses, Employment Allowance counts as 鈥榙e minimis state aid鈥� (financial support from the government). There鈥檚 a limit to how much de minimis state aid these businesses can get over a 3-year period. If they exceed the limit, they cannot claim Employment Allowance.

De minimis state aid limits are likely to apply to your business if both of the following are true:

• your business is located in Northern Ireland
• your business makes or sells goods or wholesale electricity

If de minimis state aid limits apply to your business, you must:

• work out how much state aid you鈥檝e received in total
• check that you鈥檙e below the limit

You must do this even if your business does not make a profit.

For more information, read the technical guidance on the UK鈥檚 international subsidy control commitments, Northern Ireland Protocol section.

Check you鈥檙e below the de minimis state aid limit

The limit depends on your business sector. It鈥檚 worked out in euros.

Sector	De minimis state aid limit over 3 years
Agriculture products鈥�	20,000 euros
Fisheries and aquaculture鈥�	30,000 euros
Road freight transport	100,000 euros
滨苍诲耻蝉迟谤颈补濒鈥�/辞迟丑别谤	200,000 euros

Work out how much de minimis state aid you鈥檝e received

1. Check if you鈥檝e received any de minimis state aid - if so, you should have been told in writing.

2. Add the total amount you鈥檝e received or been allocated for the current and past 2 tax years.

3. Add this to the full amount of Employment Allowance for the year you鈥檙e claiming for. You鈥檒l need to convert this into euros using the exchange rate for the end of the previous tax year. If you鈥檙e claiming for 2022 to 2023, you鈥檒l need to use the exchange rate on 30 March 2022: 拢1 to 1.1826 euros.

4. If the total is below the limit for your sector, you鈥檙e eligible to make a claim.

If you鈥檙e a connected company, the total de minimis state aid for all of the companies in the group must be below the state aid limit for your sector.

The rules are different if your business covers more than one sector.

Who cannot claim Employment Allowance

You cannot claim if you鈥檙e a public body or business doing more than half your work in the public sector (such as local councils and NHS services) - unless you鈥檙e a charity.

You also cannot claim if your company has just one director and that director is the only employee liable for secondary Class 1 National Insurance.

Employees you cannot include in your claim

Certain employees cannot be included in your claim, such as:

• someone whose earnings are within IR35 鈥榦ff-payroll working rules鈥�
• someone you employ for personal, household or domestic work (like a nanny or gardener) - unless they鈥檙e a care or support worker

You need to claim Employment Allowance every tax year.

You can claim at any time in the tax year, but the earlier you claim the sooner you will get the allowance.

If you claim late and do not use your Employment Allowance against your employers鈥� Class 1 National Insurance liabilities, you鈥檒l have to ask HMRC to do one of the following:

• use any unclaimed allowance at the end of the year to pay any tax or National Insurance you owe (including VAT and Corporation Tax if you do not owe anything on your PAYE bill)
• give you a refund after the end of the tax year if you do not owe anything

You cannot claim a refund for the difference between your total employers Class 1 National Insurance liability, and the full amount of Employment allowance for the tax year.

You can see how much Employment Allowance you鈥檝e used in your HMRC online account.

Claiming for past years

You can claim Employment Allowance for the previous 4 tax years, dating back to the 2020 to 2021 tax year.

For the tax years 2020 to 2021 and 2021 to 2022, it does not matter how much your employers鈥� Class 1 National Insurance liability was or how much de minimis state aid you received.

The thresholds for employers鈥� Class 1 National Insurance and de minimis state aid do not apply.

Employment allowance was:

• 拢5,000 each year between 6 April 2022 and 5 April 2024
• 拢4,000 each year between 6 April 2020 and 5 April 2022

Further information

Read 鈥�Claiming Employment Allowance: further employer guidance鈥� for more information.

How you claim depends on whether you use your own payroll software or HMRC鈥檚 Basic PAYE tools.

If you use your own software

To claim through your payroll software, put 鈥榊es鈥� in the 鈥楨mployment Allowance indicator鈥� field next time you send an Employment Payment Summary (EPS) to HM Revenue and Customs (HMRC).

If your payroll software does not have an Employment Payment Summary field, you can use HMRC鈥檚 Basic PAYE Tools.

If the de minimis state aid rules apply to your business

If the de minimis state aid rules apply to your business, you must select the business sectors that apply to you, even if you do not make a profit.

Most businesses will need to select the 鈥業ndustrial/other鈥� category, for example a hair salon or restaurant.

If this is not true for you, choose 鈥楽tate aid rules do not apply鈥�.

If you use HMRC鈥檚 Basic PAYE Tools

1. Select the correct name in the 鈥楨mployer鈥� menu on the home page.

2. Select 鈥楥hange employer details鈥�.

3. Select 鈥榊es鈥� in the 鈥楨mployment Allowance indicator鈥� field.

4. Answer 鈥榊es鈥� to the 鈥楧o state aid rules apply?鈥� question if de minimis state aid rules apply to you. Then select the business sectors that apply to you. Otherwise, answer 鈥楴o鈥� and select 鈥楽tate aid rules do not apply鈥�.

5. Send your EPS as normal.

If you make off-payroll payments

If you鈥檙e eligible for Employment Allowance but your claim is rejected, you鈥檒l need to call HMRC鈥檚 Employer Helpline.

Stopping your claim

If you stop being eligible, select 鈥楴o鈥� in the 鈥楨mployment Allowance indicator鈥� field in your next EPS.

Do not select 鈥楴o鈥� just because:

• you鈥檝e reached the 拢5,000 limit before the end of the tax year - this does not make you ineligible
• you鈥檙e no longer employing anyone - this allowance will stop at the end of the tax year

You can begin using your Employment Allowance as soon you submit your claim.

HM Revenue and Customs (HMRC) will not send you a confirmation letter for your Employment Allowance.

If your claim is rejected, you will receive an automated message from HMRC within 5 working days.

You may need to tell HMRC if last year鈥檚 employers鈥� Class 1 National Insurance liabilities included deemed payments, taking you over the 拢100,000 threshold.

When your Employment Allowance counts as de minimis state aid

If you have selected a business sector in your claim, HMRC will send a letter stating that your Employment Allowance counts as de minimis state aid.