You could potentially be reducing your National Insurance bill by £3,000 per year as an employer.

How it works

Employment allowance can reduce an employers National Insurance bill by up to £3,000. This means employers with a liability below £3,000 could potentially have no liabilities and employers with a liability over £3,000 could have a reduction of this amount leaving a smaller fraction owed to HMRC.

The allowance can be utilised until the point it is completely used up. After this the full liability for the following months has to be paid.

For example

  Employment allowance Employers National Insurance contribution Balance carried into next month
Month 1 £3,000 £750 £2,250


This cycle will continue until the allowance has been used up and then the liability has to be paid in full for the rest of the year. If the balance is not used up it is lost and cannot be carried into the following year.

Who qualifies?

Not all businesses are entitled to the employment allowance. This includes one-man companies where the sole employee is the director. However, in family run businesses where other members are paid employees this can be beneficial.

The allowance is also not available to employers who employ people for personal or domestic work such as gardeners and child minders.

How can I claim the allowance?

If you are eligible you can claim the allowance through your employer’s real time software package.