The short answer
Employment Allowance for 2026/27 is up to £10,500, the same as last year. Most businesses and charities that employ staff can claim it, as long as they are not a one-director company where the director is the only person paid above £5,000 a year. You claim it through your payroll, and you must claim it again every tax year.
What Employment Allowance is
Employment Allowance reduces the employer (secondary) Class 1 National Insurance you pay on your staff's wages. It does not change what your employees pay, and it does not touch PAYE income tax.
Once you've claimed it, your payroll stops charging employer National Insurance each pay run until the £10,500 is used up or the tax year ends, whichever comes first. If your employer National Insurance for the whole year is less than £10,500, the allowance simply covers all of it. You don't get the difference back.
It can only be used against employer Class 1 National Insurance. It cannot be used against Class 1A (benefits in kind) or Class 1B (PAYE Settlement Agreements).
The 2026/27 figures
| Item | 2026/27 | 2025/26 |
|---|---|---|
| Employment Allowance (maximum) | £10,500 | £10,500 |
| Employer National Insurance rate | 15% | 15% |
| Secondary threshold (employer NI starts above) | £5,000 a year (£417 a month, £96 a week) | £5,000 a year |
| Upper limit on who can claim | None | None |
Source: HMRC, Rates and thresholds for employers 2026 to 2027. Figures checked 24 October 2026.
What has changed for 2026/27
Nothing, as far as the allowance itself goes. The amount and the eligibility rules are the same as in 2025/26.
The big changes came in April 2025, and they still catch people out:
- →The allowance more than doubledFrom £5,000 to £10,500.
- →The £100,000 cap was removedBefore April 2025 you could only claim if your employer National Insurance bill for the previous year was under £100,000. That test has gone, so larger employers can now claim.
- →Employer National Insurance went upThe rate rose from 13.8% to 15% and the secondary threshold dropped from £9,100 to £5,000, so most employers pay more. The bigger allowance offsets some or all of that for smaller employers.
If you stopped claiming because you were over the £100,000 limit, check whether you should have claimed in 2025/26. You can still go back and do it (see "Claiming for earlier years" below).
Who can claim
You can claim Employment Allowance for 2026/27 if you pay employer Class 1 National Insurance on at least one employee's or director's earnings and you are:
- ✓A business (sole trader, partnership or limited company) that does less than half its work in the public sector, such as for local councils or the NHS
- ✓A charity, including a community amateur sports club
- ✓An individual employing a care or support worker, for example for someone with a disability
Limited companies with staff are the most common claimants: a company with even one employee paid above £5,000 a year alongside the director will usually qualify.
Who cannot claim
- ✕One-director companies where the director is the only one paid above the thresholdThis is the exclusion that affects most small limited companies. Other staff paid below £5,000 a year do not change it. See the next section.
- ✕Employers doing more than half their work in the public sectorUnless they are a charity.
- ✕Household employersIf you employ a nanny, cleaner, gardener or other domestic staff for personal or household work, you can't claim for them. Care and support workers are the exception.
- ✕Deemed employees under IR35Workers whose earnings fall under the off-payroll working rules don't count, and the allowance can't be set against that National Insurance.
- ✕A second company in the same groupWhere companies or charities are connected, only one of them can claim, and only against one PAYE scheme. Any unused allowance cannot be moved to another scheme.
The single-director rule, explained
A limited company can't claim if its only employee paid above the secondary threshold is a director. What matters is how many people are paid above £5,000 a year, not how many people are on the payroll.
Not eligible
One director paid £12,570, plus a part-time assistant paid £4,000. Only the director is above £5,000.
Not eligible
Two directors, but only one is paid above £5,000.
Eligible
One director plus one employee, both paid above £5,000.
Eligible
Two directors, both paid above £5,000 (pro-rata if one was appointed part-way through the year).
If the second person leaves part-way through the year, the company can still claim for that tax year. From the next tax year it should stop, unless someone else is taken on and paid above the threshold.
A worked example
A limited company employs four people, each paid £30,000 a year, and pays them monthly.
| Earnings above the threshold, per employee | £30,000 − £5,000 = £25,000 |
| Employer National Insurance per employee (15%) | £3,750 |
| Employer National Insurance, four employees | £15,000 |
| Less Employment Allowance | − £10,500 |
| Employer National Insurance to pay for the year | £4,500 |
Monthly employer National Insurance is £1,250, so the allowance covers April to November in full and most of December. The company starts paying employer National Insurance again from the December payroll.
To use the whole £10,500, you need about £70,000 of total pay above the threshold across your staff (£10,500 ÷ 15%). Below that, the allowance wipes out your employer National Insurance completely.
How to claim it
- 1Check you are eligibleGo through the "who can claim" and single-director points above.
- 2Answer 'Yes' to the Employment Allowance indicatorIn your payroll software, on your next Employer Payment Summary (EPS). If your software doesn't have the field, use HMRC's free Basic PAYE Tools.
- 3Answer the subsidy questionYour software may ask whether de minimis subsidy rules apply and which sector you're in. Most businesses pick 'Industrial/other'. If you're in agriculture, fisheries or road freight, or unsure, check before you answer.
- 4Let payroll do the restEmployer National Insurance is reduced automatically each pay run until the allowance is used up. You can see how much you have used in your HMRC online account.
Claim every year
Employment Allowance does not carry over. You have to claim it again for each new tax year, so check the indicator on your first EPS after 6 April.
You can claim at any point in the tax year. If you claim late and can't use the full allowance against the rest of the year's payroll, ask HMRC to set the unused amount against other tax you owe at the end of the year (including VAT or Corporation Tax), or to refund it if you owe nothing. You can't get back more than your employer National Insurance for the year.
Only answer 'No' on a later EPS if you have stopped being eligible. Don't do it because you've used up the £10,500 or have no employees left. If you withdraw the claim before 5 April, the allowance for that year is removed and the employer National Insurance becomes payable.
Claiming for earlier years
If you were eligible but didn't claim, you can go back up to four tax years:
| Tax year | Allowance | £100,000 test |
|---|---|---|
| 2025/26 | £10,500 | No limit |
| 2024/25 | £5,000 | Previous year's employer NI under £100,000 |
| 2023/24 | £5,000 | Previous year's employer NI under £100,000 |
| 2022/23 | £5,000 | Previous year's employer NI under £100,000 |
For the £100,000 test, add together all your PAYE schemes. Deemed payments for off-payroll workers don't count towards it. Claims for earlier years are also made through an EPS for the year concerned.
Common questions
How much is Employment Allowance for 2026/27?
Up to £10,500 for the 2026/27 tax year (6 April 2026 to 5 April 2027), the same as 2025/26. It reduces the employer Class 1 National Insurance you pay through payroll; it cannot be more than your actual employer Class 1 bill for the year.
Can a limited company with one director claim Employment Allowance?
Not if the director is the only employee paid above the secondary threshold (£5,000 a year in 2026/27). The company becomes eligible when at least one other employee or director is also paid above that threshold.
Do I have to claim Employment Allowance every year?
Yes. It is not automatic and does not roll over. You claim it each tax year by answering 'Yes' to the Employment Allowance indicator on an Employer Payment Summary (EPS) from your payroll software or HMRC's Basic PAYE Tools.
Can I claim Employment Allowance for earlier years?
Yes, for up to the previous four tax years if you were eligible at the time: £10,500 for 2025/26 and £5,000 a year for 2022/23 to 2024/25. For 2024/25 and earlier, your employer Class 1 National Insurance in the previous tax year also had to be under £100,000.
Does the £100,000 limit still apply?
No. From 6 April 2025 there is no upper limit, so larger employers can claim too. The £100,000 test only matters if you are claiming for 2024/25 or earlier.
This guide covers the general rules as published by HMRC on GOV.UK and was checked on 24 October 2026. It is not advice for your specific circumstances. Rates and rules can change, so check the current position before you act.