Sarah Bradford highlights the benefits of the employment allowance and outlines the eligibility conditions.
The employment allowance is a National Insurance allowance which eligible employers can set against their secondary Class 1 National Insurance contributions (NICs) liability. The allowance is set at £10,500 for 2025/26. However, it is capped at the amount of the employer’s secondary Class 1 NICs liability for the year, where this is lower.
The secondary Class 1 NICs landscape changed quite significantly from 6 April 2025. From that date, the secondary Class 1 NICs rate rose to 15% (from 13.8%) and the secondary threshold fell to £5,000 a year (£96 per week, £417 per month) from £9,100 a year (£175 per week, £758 per month).
To partially mitigate the impact of these changes, the employment allowance was increased from £5,000 to £10,500. Its
