Employment Allowance
Glossary
Employment Allowance
The Employment Allowance is a UK tax break that lets eligible smaller employers reduce their annual Class 1 NIC bill by up to £5,000.
Eligibility: you must be a business or charity paying employer Class 1 NIC, with the previous year's Class 1 secondary NIC bill below £100,000. From April 2025 the £100,000 cap is removed, opening the allowance to many more employers. Single-director companies with no other employees are excluded (so the allowance doesn't go to one-person Ltd companies dodging NIC on the director's own salary). Claim it through payroll software — most software handles this automatically.
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