It’s no secret that the cost of employing staff has gone up. From 6 April 2025, the Employer’s National Insurance (NI) rate jumped from 13.8% to 15%, and the secondary threshold—the level at which employers start paying NI—fell dramatically from £9,100 to just £5,000.
That’s a big change for small businesses and personal companies alike. But if you play it smart, there’s still a way to reduce your NI bill—by making use of the Employment Allowance.
Let’s break it down.
What’s Changed with Employer’s NI?
For the 2025/26 tax year, employers now pay 15% NI on any earnings over £5,000 a year—which works out to just £96 per week or £417 per month. This is well below the Lower Earnings Limit, which now stands at £125 per week.
This means if you’re running a limited company and paying yourself a salary, the NI bill can add up quickly—even if you’re only taking a small wage.
The Employment Allowance: A Hidden Lifeline
If your company qualifies, the Employment Allowance lets you knock £10,500 off your Employer’s NI bill for 2025/26.
Sounds great, right? Unfortunately, there’s a catch.
If you’re the only employee in your company and also a director, you can’t claim the Employment Allowance. But with a little planning, you can get around this.
How to Qualify for the Employment Allowance
To qualify, your company simply needs to have at least one employee who isn’t a director—and you need to incur some secondary NI contributions for them. That’s it.
So, how can you tick that box without breaking the bank?
- Hire someone temporarily – Bringing on a summer intern or a student for a week, earning just £97 or more, is technically enough.
- Employ your spouse part-time – If they do some admin or help with your business, you could pay them a small salary and meet the criteria.
- Change the director setup – Another route is to appoint your spouse as director and step down yourself. Then, your company will have an employee (you) who isn’t a director—unlocking the allowance.
Why This Matters
Let’s look at an example. If you pay yourself a salary of £6,500 without the Employment Allowance, you’ll face a £225 Employer’s NI bill.
But if you qualify for the allowance, that £225 is covered—along with any other secondary NI you owe—up to a total of £10,500.
Even better, it means you could pay yourself a salary up to £12,570 (your personal allowance) without paying a penny in tax or NI—as long as the allowance covers your NI liability.
Need Help Making It Work for You?
There’s no one-size-fits-all solution, but with the right advice, you can make the most of your salary and keep your NI bill in check.
Thinking of employing someone—or reshuffling your company setup—to claim the Employment Allowance? We’d love to help.
Get in touch with Jon or the team today to talk through your options and find the best strategy for your business.
If you found this useful, please share it using the icons at the side of the page, or leave a comment below.
Any questions?
If you’d like a meeting or a video call to discuss this, please get in touch with your favourite Liverpool accountant
- You can ring us on 0151 380 8080
- You can email us at gr****@*********************co.uk