Are You Eligible to the New Employment Allowance ?

As of 6 April 2025, the UK government is introducing major enhancements to the Employment Allowance—a key relief that helps reduce the rising National Insurance Contributions (NICs) burden on employers.

Changes to Employment Allowance

• Increased Allowance: The maximum Employment Allowance has been doubled from £5,000 to £10,500 per year.
• Removal of the £100,000 Threshold: Previously, only employers with a secondary NICs liability under £100,000 could claim. From April 2025, this restriction has been scrapped, making more employers eligible.
• Broader Access: The changes open the door for larger employers to benefit, especially important now that NIC costs are increasing.

Small Business Example: How Much You Can Save ?

Take a business with two employees, each earning £15,000 a year.

Before April 2025, with a NIC threshold of £9,100 and a rate of 13.8%, the employer’s total NIC bill would be around £1,627.20.

From April 2025, the threshold lowers to £5,000 and the rate increases to 15%, bringing the NIC liability to £3,000.

This is a £1,372.80 increase in employer costs—but with the newly enhanced £10,500 Employment Allowance, this entire amount can be offset. For many small employers, this means no employer NICs payable despite rising rates.

✅ Eligibility Criteria for Employment Allowance

To qualify for the Employment Allowance from April 2025, employers must meet the following criteria:

• Be a business, charity, or community amateur sports club.
• No longer subject to the £100,000 NICs cap—this restriction has been removed.
• Not be a public body or mainly carrying out public functions.
• Not be a single-director company where the director is the only employee.
• Not use off-payroll workers (IR35 contractors).
• Businesses in Northern Ireland must still consider de minimis state aid limits.

Call to Action – Check If You’re Eligible

If you're unsure whether your business qualifies for the Employment Allowance, speak to your accountant now—it could save you thousands in National Insurance costs, especially with the changes taking effect from April 2025.

***Contact us to learn more.

#EmploymentAllowance #NationalInsurance #AreYouEligible #TaxRelief #SmallBusinessSupport #UKTaxChanges #EmployerNICs #Budget2025