United Kingdom Employment Allowance 2026–27
Employment Allowance reduces eligible employers’ National Insurance liability. Eligibility and payroll restrictions apply separately from the annual maximum.
- Annual maximum
- £10,500 in 2026–27.
The 2026–27 allowance
HMRC’s employer rates table states that Employment Allowance for 2026–27 is £10,500. It reduces eligible employers’ annual National Insurance liability by up to that amount. HMRC, Rates and thresholds for employers (opens in a new tab).
The allowance applies against employers’ Class 1 National Insurance liability. Less is paid through payroll until the allowance is used or the tax year ends. Employers with liability below £10,500 can still claim. HMRC, Employment Allowance amounts (opens in a new tab).
Employer eligibility
A business or public body can claim for the current tax year if less than half its work is in the public sector. Charities, including community amateur sports clubs, and employers of care or support workers can also claim. HMRC, Employment Allowance eligibility (opens in a new tab).
For a company with only one director, that director must not be the only employee liable for secondary Class 1 National Insurance. Employers paying more than £100,000 in Class 1 liabilities have been able to apply from April 2025. HMRC, Employment Allowance eligibility (opens in a new tab).
Employees, groups and payrolls
The claim route depends on the payroll software used. In an employer’s own software, the Employment Allowance indicator is set to ‘Yes’ on the next Employment Payment Summary sent to HMRC. HMRC’s Basic PAYE Tools provide another claim route. HMRC, Claim Employment Allowance (opens in a new tab).
Employees within IR35 off-payroll working rules cannot be included. Personal, household and domestic workers are also excluded unless they are carers or support workers. Only one company in a connected group can claim, and an employer can claim against only one payroll. HMRC, Employment Allowance eligibility (opens in a new tab).
Scope
This guide provides general information only. It does not assess individual tax liability or benefit entitlement and contains no worked example.