Employment Allowance Eligibility

The employment allowance was introduced in April 2014 to help employers grow and to hire new staff.

If you are an eligible employer, the allowance can be used to reduce employer national insurance costs. You can claim at any time in the tax year but the sooner you claim the sooner you save.

Significant changes were introduced from 6th April 2020 resulting in the need to check and claim each tax year. Claims are made by submitting an Employer Payment Summary (EPS) to HMRC.

The allowance changed in 2020 from £3,000 to £4,000 and a further increase from April 2022 then took the allowance to £5,ooo. From 6th April 2025, there were some major changes, which included the removal of the £100,000 eligibility threshold and it was increased to £10,500.

Past years can be claimed for, but claims are limited to the previous 4 years.

Eligibility is subject to a range of considerations which include, being a service company; being a director and a sole employee; the presence of connected companies; and being a recipient of state aid within the previous two years. This may sound complex, but we have a simple eligibility assessment process that we can guide you through.

Make a note to check every April as your circumstances could change which means you either become eligible or ineligible.

Please contact Devila Rabadia or Clare Robinson if you would like help determining your eligibility for the employment allowance or alternatively provide your contact details below and we will respond.