UK Employment Allowance 2025/26: A Simple Guide for Employers

admin — Mon, 28 Apr 2025 08:05:16 +0000

Intro post:

Managing payroll as an employer can feel complicated, but the Employment Allowance is a valuable relief that can significantly reduce your costs. Here’s everything you need to know for the 2025/26 tax year.

What Is the Employment Allowance?
It’s a government relief that helps businesses and charities reduce their employer National Insurance (NI) contributions.
For 2025/26, you can save up to £10,500 per year.
The allowance is automatically applied against your monthly/quarterly employer NI liabilities once claimed.
What Changed in 2025/26?

The limit increased

From £5,000 to £10,500 (effective 6 April 2025). The £100,000 cap was removed
Previously, if your employer NI bill in the previous tax year exceeded £100,000, you couldn’t claim.
From 2025/26, larger businesses can also qualify.

Who Can Claim?

✅ Eligible:

Businesses that pay employer Class 1 National Insurance on employees’ wages.
Charities and community amateur sports clubs (CASCs).
Companies with more than one director earning above the Secondary NI threshold (so they are not classed as “single-director companies”).

❌ Not Eligible:

Companies where the only paid worker is a single director.
Public sector employers carrying out the majority of their work in the public sector (with some exceptions).

How to Claim the Employment Allowance

You can normally claim via:

Payroll software
Or HMRC’s Basic PAYE Tools

But instead of dealing with the process yourself, you can let Sadler & Frost handle the entire claim on your behalf.

✅ We check your eligibility (including tricky multiple-director rules).
✅ We set up and submit the claim correctly through HMRC systems.
✅ We monitor your allowance throughout the year to make sure you get the full £10,500 benefit.

Example Scenarios

Example 1
Employer NI liability: £8,000
Employment Allowance: £10,500
➡ Employer pays £0 Employer’s NI

Example 2
Employer NI liability: £15,000
Employment Allowance: £10,500
➡ Employer pays £4,500 Employer’s NI

Conclusion

The Employment Allowance is more generous than ever for the 2025/26 tax year. With the allowance increased to £10,500 and the £100,000 Employer’s NI cap removed, both small businesses and larger employers can now benefit.

That said, eligibility rules — particularly around single vs. multiple directors — can be complex and mistakes can lead to rejected claims or HMRC issues.

That’s where we come in.
At Sadler & Frost, we make sure your Employment Allowance claim is accurate, compliant, and fully maximised.

Key Takeaways
• £10,500 annual Employment Allowance from April 2025
• Reduces your employment costs by up to £10,500 per year
• £100,000 Employer’s NI cap removed — larger employers now qualify
• Single-director companies (with no other qualifying staff) remain excluded
• Multiple-director companies may qualify if more than one director earns above the NI threshold
• Encourages businesses to hire and retain staff
• Improves cash flow throughout the tax year
• Claim easily with expert support from Sadler & Frost

⸻

👉 Don’t leave money on the table.
Make sure your business doesn’t miss out on the Employment Allowance.
Contact Sadler & Frost today — we’ll handle the claim, ensure full HMRC compliance, and maximise your entitlement.

next-gen ai – Sadler & Frost

UK Employment Allowance 2025/26: A Simple Guide for Employers

Intro post:

Who Can Claim?

Example Scenarios